considering withholding electricity consumer payments to the Nuclear Waste Fund due to inaction by
the federal government.
DOE recognizes that failing to meet its 1998 responsibility will cause utilities and their customers to
face significant costs associated with expanding spent fuel storage at reactor sites.
Although there is
an urgent need to develop a central storage facility now, an interim storage program is meaningful
only if DOE continues to make progress in developing a permanent repository.
The nuclear waste disposal issue will be solved only when the federal government satisfies its
responsibility to begin accepting spent fuel beginning in 1998. We are ready to work with the
administration and Congress in the development of an integrated spent nuclear fuel management
system that can satisfy DOE's commitment to electricity consumers.
The nuclear industry is also concerned that DOE funds are being spent for additional scientific tests
at the proposed low-level radioactive waste disposal site in California despite the fact that low-level
waste disposal is a state, not a federal, responsibility. California has already exhaustively studied the
Ward Valley site and has not asked for DOE assistance.
Nonetheless, the Interior Department again delayed the transfer of land at Ward Valley, Calif., for
this facility. Instead, the Interior Department ordered new tests and asked DOE to conduct a year-
long study of the site. The administration requested this new study despite assurances firom NAS and
the state of California that the site is safe. Mr. Chairman, the industry believes that funds
appropriated by Congress should not be used to conduct this study, which amounts to an election-year
payofi"that sacrifices the needs of patients and consumers. Congress instead should take appropriate
action to prevent fiirther obstruction by the federal government in California's efforts to comply with
the Low-Level Radioactive Waste Policy Act.
The nuclear energy industry continued to push plant performance to record levels and cut production
costs in 1995. America'E nuclear plants established record levels of efficiency for the sixth straight
year — achieving a 76.7 percent capacity factor. While continuing a steady upward trend over the last
10 years in increased productivity, utilities that operate the nation's nuclear power plants cut
operating and maintenance costs by 8 percent from 1993 to 1994.
Lower production costs and increased production translate to electricity costs at nuclear power plants
that are competitive with coal-fired plants and cheaper than oil, natural gas and renewable energy
As the electric utility industry becomes more competitive, utilities must closely examine their budgets
in all areas. And while the industry is committed to maintaining its exemplary safety record at
nuclear power plants, it expects Congress to use fairness and equitj' in allocating user fees that
comprise 100 percent of the NRC's annual budget.
Since FY91, NRC licensees have shouldered the entire cost of the agency's budget through annual
user fee payments. Of the NRC's FY96 budget, 97 percent — $462.3 million — is recovered by assessing
user fees to utilities and their customers. The average utility licensee pays $2.7 million per nuclear
power plant, plus an average of $1 million per plant in hourly charges for NRC activities.
This level of support is unique to the nuclear energy industry and it is unlikely to change absent
pressure on the commission by this subcommittee to operate more effectively on a leaner budget. The
NRC's costs should be no higher than required for the agency to ensure protection of public health and
safety. We believe the percentage of NRC costs paid by our members should be commensurate with
agency resources dedicated to regulating the industry — not international programs and other federal
For a five-year period beginning in FY90, the commission budget increased by approximately 25
percent. There is clear evidence of budget and management inefficiencies at the NRC. The NRC
Inspector General (IG) has published several reports since 1992 that document NRC management
deficiencies that can be directly attributed to its user fee policy. In fact, a 1994 NRC stafi' study found
that utilities pay at least $35. 1 million annually in fees to support activities that have no bearing on
the regulation of commercial nuclear energy facilities.
As the subcommittee can see, there is a pressing need for improvement in containing the NRC budget
and in ensuring the equity of the commission's user fee policy. The nuclear industry will continue to
pay for NRC programs fi-om which it receives benefits and for those programs that contribute to
protecting public health and safety. However, we encourage the subcommittee to examine the
commission's FY97 budget closely and assign the industry only those costs that are appropriate to
regulation of nuclear power plants.
The industry recognizes that the NRC absorbed about a 10 percent budget decrease in FY96 by
reducing programs in its headquarters operations. Further budget reductions should not be made at
the expense of the Office of Nuclear Reactor Regulation, as they were this year. Rather, the agency
should closely examine its regional alignment and areas of redundancy that result fi-om that
The industry recommends that the NRC revise its approach to regulation and implement targets that
allow utilities to meet regulatory requirements without step-by-step, prescriptive regulation. Such a
performance-based regulatory system would maximize NRC resources and enhance efficiency in this
tight budgetary climate. We commend the NRC for beginning that transition by implementing a
performance-based maintenance rule for nuclear power plants, and encourage the commission to
continue the transition with fiiture rulemakings.
The industry is seeking to redefine the relationship between the NRC and its nuclear utility licensees
to achieve a regulatory environment that:
■ preserves the commission's statutory mandate to protect public health and safety;
■ preserves the licensee's ultimate responsibility for safe operation; and
■ meets certain fiindamental criteria of openness, clarity, consistency and efficiency.
In the area of advanced nuclear energy research and development, the industry supports $64 million
in FY97 for the DOE-industry cost-shared program to develop advanced bght water reactor (ALWR)
A consortium of 12 utilities called the Advanced Reactor Corporation (ARC) participates in the
development of new nuclear power plant designs, and represents one of the largest sources of private-
sector cost sharing to DOE's energy supply research and development activities. In recent years, the
nuclear industry, through ARC, has firont-loaded its cost share commitment for ALWR research and
development. Now, with the ALWR program on the verge of producing market-ready nuclear designs
for the 2l8t Century, the industry expects the federal government to fulfill its funding obligation with
the same commitment.
The federal government's investment in these valuable research and development projects is essential
to continuing nuclear energy's strategic role in the nation's energy portfolio. These reactor
technologies are between 50 percent and 90 percent complete. Furthermore, payback provisions in the
program will provide a return to the U.S. Treasury when these advanced nuclear power plants are
built to meet future electricity demand.
The Energy Policy Act of 1992 provided a multi-year authorization for the ALWR design certification
and first-of-a-kind engineering (FOAKE) programs to support the commercialization of advanced
reactor designs. The industry funds more than half of the program, and has upheld its side of the
agreement. However, continued federal participation is essential to completing the program.
Approximately half of the funding in FY97 is needed to complete first-of-a-kind engineering work on
two advanced bght water reactor designs. This work will provide pre-commercial engineering beyond
the scope required by the NRC for design certification. Another portion of the funding includes design
certification for two smaller, passively safe plants.
The ALWR program meets all four of the national energy goals for prioritizing the Energy
Department's R&D projects as estabhshed by the 1995 Yergin Report:
■ economic strength,
■ energy security,
■ environmental quality, and
■ science and technology leadership.
Moreover, the ALWR program fulfills all of the objectives for cost-shared programs recommended by
the Yergin Report. Those objectives include leveraging government R&D spending, introducing
market relevance into R&D decision making, and accelerating the R&D process and transferring the
results to the marketplace.
This new generation of commercial reactor technology represents a large and growing high-tech
industry and trade opportunities that will strengthen both the U.S. economy and the nation's
leadership in ensuring the peaceful use of nuclear technology.
Continuing U.S. leadership in the world market for nuclear technology is critical. America holds a
sUm to commanding edge in various areas of nuclear energy technology, but other nations, such as
France and Japan, have state-subsidized nuclear programs that are competitive in the global market.
The United States cannot afford to lose its market advantage because of a short-sighted R&D
The nuclear industry firmly believes the United States must continue to set the worldwide standard
to provide the safest and best engineered nuclear designs, components and fuel services. Many
nations will not consider U.S. reactors unless they are certified by the NRC, one of the goals of the
ALWR program. Elimination of this program wiU signal to other nations a serious lack of constancy in
U.S. poUcy, calling into question the reliability of U.S. manufacturers and jeopardizing their
participation in billions of dollars of projected nuclear projects worldwide. The nuclear export market
is significant, with up to 50 nuclear power plants expected to be ordered in Southeast Asia over the
next 15 years.
The nuclear industry believes past funding reductions and long-range plans by the administration to
reduce funding for nuclear research and development activities do serious damage to our ability to
meet the nation's long-term electricity needs and power economic growth. This subcommittee must
maintain and support research to advance nuclear energy in this country.
Finally, as part of DOE's nuclear R&D program, the industry supports funding for the university
reactor assistance and support programs. The industry programs are necessary for valuable nuclear
research and training. Continued congressional recognition of these programs for future leaders in
high-tech nuclear technologies is essential to ensure America's leadership in nuclear energy programs.
Thursday, February 29, 1996.
SOLAR RESEARCH AND DEVELOPMENT PROGRAMS
SCOTT SKLAR, EXECUTIVE DIRECTOR, SOLAR ENERGY INDUSTRIES
Mr. Myers. Next is Scott Sklar, who is Executive Director of the
Solar Energy Industries Association.
Welcome back, Scott.
Mr. Sklar. Thanks, Mr. Chairman. I have some great news for
you, and I brought props to boot.
First, I want to let you know that the solar industry, which is
composed of over 550 companies that belong to our association and
our affiliate State chapters, is thriving. The DOE program that I
am about to testify on, I want to tell you, we are on time, we are
on budget, and we have one of the most highly cost-shared pro-
grams in the DOE portfolio.
The good news on the photovoltaic side is that we ribbon-cut in
the last few months three now-automated manufacturing facilities,
and we expect three more by year-end. That was no surprise; there
is no mistake in that. It was due to the long, historic and biparti-
san support of this committee in working with our industry.
The three manufacturing facilities are ENRON in Virginia — and
Harvey Forest will tell you about that — ^Amoco in Vancouver,
Washington; and Siemens USS in Michigan, with United Solar
ECD. In fact, with the Michigan one, they will be producing roofing
shingles, PV roofing shingles. A lot of rooftops there.
The reason we have this success is that during the Bush admin-
istration, they said, we want a program that is just not pure R&D,
we want to drive the technology in the marketplace; and we devel-
oped a 50-50 cost-shared program to help the industry overcome
technological hurdles to automate manufacturing. What you see is
that cost-share. That is the result of getting six new plants in 1996
The second one was incurred in this Clinton administration,
which was: Automated plants are great, but where is the product
going to go?
Now, the market-driver has been the international market; 70
percent gets exported to Third World countries. We are the cost-ef-
fective technology, the global leader, but to attract U.S. capital, to
build automated facilities, we needed some technological assistance
to our key markets, utilities and the building sector. So we estab-
lished two more cost-shared programs, three-to-one by the utility
sector called PV-Compact, and that was to get 91 utilities, half of
the U.S. generation market in the U.S., to cost-share photovoltaics
in their markets so they build up the experience to do aggregated
purchases. And that is the process we are in, PV BONUS, to incor-
porate it in buildings, roofs, tinted windows; and it will — that will
drive the research into the marketplace on a sustainable basis.
The second has been solar thermal power, the high temperature
side. In June, we are ribbon-cutting the solar central receiver in
California, the world's first base-load solar power plant. Rain or
shine, day or night, eight utilities, 50 percent cost-shared. Southern
California is the leading partner, and our markets, China, Brazil,
We also have a great company from Indiana called COMENS,
and it is ribbon-cutting its automated manufacturing facility in
Texas to do solar-driven engines — 25 kilowatt, 7 kilowatt programs,
cost-shared, part of the first of three teams, again driving it into
the market. What we are intending to do is we have been working
on the Solar Enterprise Zone in Nevada on the test site. We will
have 1,000 megawatts over the next decade, all industry financed.
The government row. A, the Department of Defense is doing the
environmental impact statements, so we don't have to worry about
the nuclear side of it.
Secondly, the Department of Energy is driving long-term con-
tracts with the Western Area Power Administration at the going
rate. The goal is not subsidy, just the right for long-term contracts.
The solar buildings program, this is a part — a panel, but it is
the — actually the coating, and these are used for space heating.
The largest one just went up on a 200-foot building in Ontario.
Solar space heating, the industry is really starting to move, all be-
cause of highly selective coatings to do space heating, absolutely
cost-effective now, driving.
What I want to tell you is, I know there £ire concerns with budg-
ets, and I know the hard stuff you all have to do, but we have met
the challenge, we show we can cost-share, and we are not profitable
yet really as industries, because we are in our evolution mode. We
are on time, we are on budget, we have the metrics.
My final point to you is we have had a couple of other small pro-
grams within the solar budget, on the international side, the re-
source assessment and storage. One of the evolving things in re-
search that we want you to know in Congress is, there are some
things industry cannot do — resource assessment from a global per-
spective, some of the new technologies involved with storage — so
when the sun is not shining, we can be competitive.
These were teeny programs. We need you to be aware of them
because that is the cross-cutting feature so that you will see that
this technology will be on rooftops in every State of this country.
Thank you for your support.
Mr. Myers. Well, thank you for your testimony, and presenting
here your progress. I need a new roof this year. Should I start or-
dering these? Do I need to sell the farm first to pay for it?
Mr. Sklar. No. We will work out an Ethics Committee deal for
you. That won't be any problem.
Mr. Myers. Sometimes you might just let us know what the com-
parable cost is. Thank you very much for your testimony.
Mr. Fazio. Mr. Chairman, could I just say, if Scott ever shows
up here without any props, we should just cut his budget totally.
His is always one of the better shows we have.
Mr. Sklar. I keep up the challenge.
[The statement of Mr. Sklar follows:]
-•L4R ENERGY INDUSTRIES itSSOCUTION \ 22 C Street. N W
SOLAR ENERGY INDUSTRIES ASSOCIATION
COMMITTEE ON APPROPRIATIONS
SUBCOMMirTEE ON ENERGY AND WATER DEVELOPMENT
U.S. HOUSE OF REPRESENTATIVES
FISCAL YEAR 1997 APPROPRIATIONS
SOLAR ENERGY (AND RELATED) PROGRAMS
U.S. DEPARTMENT OF ENERGY
February 29, 1995
SOUR ENERGY IN0USTRrES>ISSOCI>tTION
The Solar Energy Industries Association (SEIA) is the national trade organization of the photovoltaics and
solar thermal manufacturers and component suppliers, composed of over 550 companies, 400 of whom are
members of SEIA's affiliated state and regional chapters. Today's U.S. solar energy industries are
comprised of manufacturers, component suppliers, distributors, and installers involved in the development
and deployment of a wide variety of solar energy systems, including hundreds of small entrepreneurial
businesses across the nation as well as Fortune SCO corporations.
SEIA is recommending a S 162.25 million solar research, development and demonstration budget (RD&D)
for FY '97 within the U.S. Department of Energy. This recommendation is roughly equivalent to FY '95
funding levels and is approximately 28 percent above the FY '96 appropriated levels. SEIA believes this is
the minimum acceptable level of the federal research program in order to insure that the U.S. global
technical leadership results in sustainable businesses - in other words, that the U.S. doesn't fell into the old
path of "VCR Syndrome" where the U.S. invents technology only to lose out on the hundreds of thousands
of jobs and millions of dollars of profits on commercializing these technologies.
SEIA believes that the federal solar programs are well managed, have the highest cost-shares, and are on-
time and on-budget. Our industry, which is primarily small business, has met its obligations which are
significant for a small, emerging industry.
All SEIA asks is that Congress stick viith its commitments to our industries begun under the Bush
Administration and continued under the Clinton Administration. We have and are ready to meet our
commitments to the American people.
I am here to today to make three points, which together should compel the Subcommittee to support the
solar energy programs:
1 . Federal spending for solar energy technology development, especially spending that is cost-
shared with the private sector, is a wise investment that pays off.
2. Failure to fiind the solar energy programs at critical levels would represent nothing less
than abrogation on the part of the U.S. government of multi-year commitments to U.S.
3. Solar energy budget cuts along the lines of those made in FY 1996 will result in
unrecupable co-investment and will drive private investment from our emerging industries.
SEIA's FY 1997 Appropriations Recommendations
SEIA's FY 1997 budget recommendations for the U.S. DOE's solar energy programs, outlined in detail in
Attachment A, were crafted by the solar industry in c6nsultation with state governments, the research
community, and utihty and building industry leaders to result in the most cost-efiTective leveraging of
federal dollars to bridge the gap between research and commercial viability.
SOL4R ENERGY INDUSTRIES ><SSOCl4nON
The following table summarizes our basic recommendatioiis:
SEIAS FY 1997 SOLAR ENERGY R&D APPROPRIATIONS RECOMMENDATIONS ($ millions)
Core Technology Programs
Photovoltaic Energy Programs
Solar Thermal (Electric & Industrial) Programs
Solar Buildings Technology Research
Renewable Energy Production Incentive
Hydrogen (through renewable energy resources)
Photovoltaic (PV) Programs
During the last several months, ground-breaking ceremonies for three automated photovoltaic module
manufacturing plants were conducted in Michigan, Virginia, and Washington and three more are expected to be
launched before the end of 1996. Two new U.S. manu&cturing ventures overseas were announced for Russia
and South Africa. This represents die largest growA in manu&cturing capacity in the history of photovoltaics
and American industry is the driving force in the expansion. The federal government has been instnmiental in
driving this growth trend by sharing the risk with industry in die development of new manufacturing processes,
materials, and by facilitating domestic market engagement.
These phenomenal advances in manu&cturing capacity came as no surprise to those of U.S. in the industry and
they have occurred for three primary reasons. First, the opportunities in the international markets are booming,
with two billion people currently without electricity and another biUion with less than 10 hours of reliable power
SOL4R ENERGY INDUSTRIES ilSSOCMTION
per day. International markets, primarily in the developing world, already account for over 70 percent of U.S.
Second, these new manufacturing facilities are the result of a significant departure from the business-as-usual
government research and development programs During the Bush Administration, the PV industry embarked on
a cost-shared PV Manufacturing Initiative (PVMaT) program in conjunction with the Department of Energy to
overcome technological hurdles to scale -up manu&cturing. The program was designed to build on the Japanese
experience that proved the effectiveness of reducing costs through more efBcient manufacturing techniques,
rather than through pure research on cell efficiencies.
Third, during the Clinton Administration, the PV industry entered into two cost-shared programs with the
federal government designed to build market confidence in the electric utility and building industry sectors.
The PV-COMPACT program established a cost-shared market acceleration mechamsm by engaging over 90
electric utilities (representing half of the U.S. generation capacity) and formed the Utility Photovoltaic Group
(UPVG) with support from state regulators and state consumer advocates. The PV-COMPACT approach has
been to promote interest and investment by the electric utility industry in photovoltaic technology with a goal of
building a sustainable market aggregation program. Only in this way will the technical capacity be built in the
electric utihty sector necessary for multi-year, mass quantity purchases.
Similarly, PV-BONUS was conceived to drive the development of innovative PV products for the commercial
and residential building sisctor. As a result of the accomplishments of PV BONUS, one of the new American
PV manufecturing fecilities will produce PV roofing shingles. In addition, PV BONUS has enabled U.S.
industry to develop PV window glass for commercial buildings, as well as innovative PV roofing and siding
products. The cost-shared federal investment in PV building technologies has produced these innovations which
will flow into the marketplace over the next decade.
SEIA has also recommended increasing the funding for the Thin Film Partnership Program, which is cost-shared
with the U.S. industry to drive the development of new materials in this unique applied R&D program, will keep
the U.S. a global technology leader
SEIA is requesting a $92 2 million program, which represents level funding with the FY 1995 appropriation.
However, SEIA's recommendation differs significantly fi-om either the FY 1995 or FY 1996 RD&D programs