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MARCH 5, 1991

DATED MARCH 5, 1991.


The Department of Energy estimates that a combination of increases in demand and
retirement of existing electric generation capacity will require an additional
200,000 megawatts of capacity by the year 2010.


Would you agree with Mr. Wolfe's statement that until recently there has been considerable excess electrical capacity in this country, but that this era is coming to an end?


Yes, I agree with Mr. Wolfe that the era of excess electrical capacity is over. DOE's estimate of approximately 200,000 megawatts of new capacity being required by the year 2010 is a realistic scenario that can be used for planning additional capacity.


In the late 1960's, electricity demand was increasing at about 7% per annum, which was effectively doubling supply requirements every ten years. Thus, utilities with their long planning horizons of 12 to 15 years, were adding large amounts of generation capacity. The oil shocks of the 1970's and increased conservation efforts cut demand increases by over half, leaving utilities with considerable excess capacity. Coupled with excess supply, the regulatory and legal difficulties of siting and building new capacity caused most utilities to throttle back the construction of new generating facilities. However, over time, the nation's economic growth has caused electricity demand to catch up with our excess supply. While it may not be desirable to have excess electricity supply, it is very undesirable to have electricity supply shortages.

There are significant regional indications that demonstrate the end of excess electricity supply. In 1988 there were a series of brown-outs in Massachusetts, that cost its high-tech industry at least $80 million. The warning signs continued in 1989, with rolling blackouts in Texas and Florida during the Christmas season and in 1990 with brownouts/blackouts in the mid-Atlantic states during the summer months. The warning signs are prevailing in 1991. As I mentioned in my testimony, the State of Florida is still experiencing rolling blackouts on cold days. I speak of this with some personal knowledge as while I was speaking to my mother on the telephone last February, her home in Florida, experienced a rotating blackout. This is an unacceptable way for Americans to live. Our nation cannot tolerate electricity shortages while trying to successfully compete with Japan, Korea, and Europe in the economic arena.


In the area of forecasting, which looks out about ten years in time, I would recommend the use of a probabilistic technique to assess varying scenarios. It has been observed that in times of slow economic growth, forecasts are necessarily low. In periods of high economic activity and high power growth, the forecasts naturally continue to assume the same, resulting in high growth forecasts. The time at which the forecast is made, greatly influences the resultant energy growth scenario. Thus, if we apply a more rigorous probabilistic approach, which I believe the Department of Energy has done, the temporal perceptions of energy demand versus supply would be levelized. It is important to do this because generation cannot be put on line on short notice. To assure reliable power supply, the waves of economic activity and perception must be levelized so that power will be available when required


Faced with today's environmental laws, such as the Clean Air Act, in your judgement, can this requirement for new generation capacity be satisfied without a greater role for nuclear power than is possible under present circumstances?


I do not believe very many dispute the fact that nuclear power is a major electric generating source available today that can meet the Clean Air Act standards. Unlike many fossil plants, the nation's existing nuclear power plants meet the provisions of the Clean Air Act of 1990, without the need for extensive backfitting. Even more importantly, nuclear power plants do not emit any CO2, which is an atmospheric pollutant not covered by the Clean Air Act, but nevertheless of increasing concern because it is a primary cause the "greenhouse effect" or global warming. With that in mind, I see new nuclear power plant construction as a key component in a balanced mix of generation capacity and conservation efforts. Certainly, nuclear power can and should generate much more than 20 percent of this nation's electricity supply - the environment and our economy will be significant beneficiaries.



In your judgement, can the third world meet its anticipated requirements for electricity without a large expansion of nuclear power?


The report of the World Commission on Environment and Developmeat in 1987 stated that the "continued prosperity of the developed world depends on the rapid extension of prosperity to the less developed nations in an environmentally responsible manner." As we know from our own experience, electricity has become the energy source of choice in today's economic competition. Thus, for the Third World to prosper, its electricity supply must expand.

For electricity supply to expand in the third world, fossil fuels are the likely candidates, hopefully, with modern pollution control devices. This expansion of fossil fuel use will create global environmental problems which can be mitigated by industrialized nations increasing their use of nuclear energy to counter the increased fossil emissions. Eventually, the Third World may make nuclear power part of its electrification process, but for the foreseeable future it is best to encourage small and low capital projects and avoid the concerns regarding proliferation.

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