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Testimony: 

Before the Subcommittee on Energy and Resources, Committee on 
Government Reform, House of Representatives: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 2:00 p.m. EDT: 

Wednesday, September 20, 2006: 

Nuclear Energy: 

DOE's Next Generation Nuclear Plant Project Is at an Early Stage of 
Development: 

Statement of Jim Wells, Director: 
Natural Resources and Environment: 

GAO-06-1110T: 

GAO Highlights: 

Highlights of GAO-06-1110T, a testimony before the Subcommittee on 
Energy and Resources, Committee on Government Reform, House of 
Representatives 

Why GAO Did This Study: 

Under the administration’s National Energy Policy, the Department of 
Energy (DOE) is promoting nuclear energy to meet increased U.S. energy 
demand. In 2003, DOE began developing the Next Generation Nuclear 
Plant, an advanced nuclear reactor that seeks to improve upon the 
current generation of operating commercial nuclear power plants. DOE 
intends to demonstrate the plant’s commercial application both for 
generating electricity and for using process heat from the reactor for 
the production of hydrogen, which then would be used in fuel cells for 
the transportation sector. The Energy Policy Act of 2005 required plant 
design and construction to be completed by 2021. 

This testimony, which summarizes a GAO report being issued today (GAO-
06-1056), provides information on DOE’s (1) progress in meeting its 
schedule for the Next Generation Nuclear Plant project and (2) approach 
to ensuring the project’s commercial viability. For the report, GAO 
reviewed DOE’s research and development (R&D) plans for the project and 
the reports of two independent project reviews, observed R&D 
activities, and interviewed DOE, Nuclear Regulatory Commission (NRC), 
and industry representatives. 

What GAO Found: 

DOE has prepared and begun to implement plans to meet its schedule to 
design and construct the Next Generation Nuclear Plant by 2021, as 
required by the Energy Policy Act of 2005. Initial R&D results are 
favorable, but DOE officials consider the schedule to be challenging, 
given the amount of R&D work that remains to be conducted. For example, 
while researchers have successfully demonstrated the manufacturing of 
coated particle fuel for the reactor, the last of eight planned fuel 
tests is not scheduled to conclude until 2019. DOE plans to initiate 
the design and construction phase in fiscal year 2011, if the R&D 
results support proceeding with the project. The act also requires that 
DOE and NRC develop a licensing strategy for the plant by August 2008. 
The two agencies are in the process of finalizing a memorandum of 
understanding to begin work on this requirement. 

DOE is just beginning to obtain input from potential industry 
participants that would help determine the approach to ensuring the 
commercial viability of the Next Generation Nuclear Plant. In the 
interim, DOE is pursuing a more technologically advanced approach, 
compared with other options, and DOE has implemented some (but not all) 
of the recommendations made by two advisory groups. For example, as 
recommended by one advisory group, DOE lessened the need for R&D by 
lowering the reactor’s planned operating temperature. In contrast, DOE 
has not accelerated its schedule for completing the plant, as 
recommended by the Nuclear Energy Research Advisory Committee. The 
committee was concerned that the time frame for completing the plant is 
too long to be attractive to industry, given that other advanced 
reactors may be available sooner. However, DOE believes the approach 
proposed by the committee would increase the risk of designing a plant 
that ultimately would not be commercially viable. GAO believes DOE’s 
problems with managing other major projects call into question its 
ability to accelerate design and completion of the Next Generation 
Nuclear Plant. 

Figure: Actual Size and Magnified Views of the Coated Particle Fuel: 

[See PDF for Image] 

Sources: General Atomics (left); DOE (right). 

[End of Figure] 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-1110T]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Jim Wells at (202) 512-
3841 or wellsj@gao.gov. 

[End of Section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here to discuss the Department of Energy's (DOE) 
progress on its Next Generation Nuclear Plant demonstration project. My 
testimony is based on our report being issued today, entitled Nuclear 
Energy: Status of DOE's Effort to Develop the Next Generation Nuclear 
Plant (GAO-06-1056). As you know, the administration's National Energy 
Policy calls for the greater use of nuclear power and hydrogen to meet 
the nation's growing energy needs. The purpose of the Next Generation 
Nuclear Plant project is to establish the technical and commercial 
feasibility of producing both electricity and hydrogen from an advanced 
nuclear reactor. DOE has been engaged since fiscal year 2003 in 
research and development (R&D) on such a plant. The Energy Policy Act 
of 2005 formally established the Next Generation Nuclear Plant as a DOE 
project and set further requirements for the project's implementation, 
including obtaining a license from the Nuclear Regulatory Commission 
(NRC) to operate the plant and completing the project by fiscal year 
2021.[Footnote 1] DOE estimates the total cost of the plant to be 
approximately $2.4 billion. The act also designated DOE's Idaho 
National Laboratory as the lead laboratory and construction site for 
the plant and gave it responsibility for carrying out cost-shared R&D, 
design, and construction with industry partners. The Idaho National 
Laboratory has considerable experience with nuclear energy 
technologies. Since 1949, 52 nuclear reactors have been designed and 
tested at the site. 

DOE has chosen the "very-high-temperature reactor," which is cooled by 
helium gas, as the advanced reactor design for the Next Generation 
Nuclear Plant. As its name implies, this reactor would operate at a 
much higher temperature than existing nuclear power plants--up to about 
950 degrees Celsius (1,742 degrees Fahrenheit). This temperature would 
be roughly three times the temperature of a light water reactor, which 
is cooled by water and is the technology generally in use in the United 
States and around the world. Despite the high temperature, there is 
general agreement that a gas-cooled reactor offers the potential for 
improved safety. In addition, DOE considers the very-high-temperature 
reactor to be the nearest-term advanced nuclear reactor design that 
operates at temperatures high enough to generate the heat (called 
"process heat") needed to produce hydrogen. Under the administration's 
National Hydrogen Fuel Initiative, hydrogen is envisioned to be used in 
fuel cells for the transportation sector as an alternative to imported 
oil. 

Over the course of the last several years, two independent groups have 
reviewed DOE's plans for the Next Generation Nuclear Plant. The 
Independent Technology Review Group--coordinated by the Idaho National 
Laboratory and composed of an international group experienced in the 
design, construction, and operation of nuclear systems--issued a report 
in 2004 on the design features and technological uncertainties of the 
very-high-temperature reactor. The report concluded that the 
uncertainties associated with the project appeared manageable and that 
the project's objectives could be achieved.[Footnote 2] In 2006, as 
required by the Energy Policy Act of 2005, DOE's Nuclear Energy 
Research Advisory Committee also completed an initial review of the 
project.[Footnote 3] The advisory committee reviewed DOE's R&D plans in 
light of the Independent Technology Review Group's report and 
recommended that DOE accelerate the project. Both reviews also made 
recommendations to modify DOE's R&D plans to ensure the project's 
success. 

DOE is managing the Next Generation Nuclear Plant under its project 
management process for the acquisition of capital assets, which sets 
forth planning requirements that have to be met before DOE may begin 
design or construction activities. The goal of these requirements is to 
complete projects on schedule, within budget, and capable of meeting 
performance objectives. Our reviews of DOE's management of other major 
projects have found that project management has long been a significant 
challenge for DOE and is at high risk of waste and 
mismanagement.[Footnote 4] In an effort to improve cost and schedule 
performance, DOE issued new policy and guidance on managing and 
controlling projects in 2000, but performance problems continue on 
major projects. For example, we testified in April 2006 that DOE's fast-
track approach to designing and building the Waste Treatment Plant 
Project at DOE's Hanford site in Washington state increases the risk 
that the completed facilities may require major rework to operate 
safely and effectively and could increase the project's costs.[Footnote 
5] 

My testimony discusses the results of our report being issued to you 
today and addresses DOE's (1) progress in meeting its schedule for the 
Next Generation Nuclear Plant and (2) approach to ensuring the 
commercial viability of the project, including how DOE has implemented 
the recommendations of the two advisory groups. For the report, we 
analyzed DOE's project plans, interviewed DOE and Idaho National 
Laboratory officials, and observed R&D efforts at Idaho National 
Laboratory. Furthermore, we reviewed the two independent assessments of 
the project and how DOE had responded to their recommendations. We also 
reviewed NRC documentation related to the development of a licensing 
strategy for the Next Generation Nuclear Plant, and we interviewed DOE 
and NRC officials regarding licensing issues. We performed our work 
from April to September 2006 in accordance with generally accepted 
government auditing standards. 

Summary: 

DOE has prepared an R&D schedule designed to support the design and 
construction of the Next Generation Nuclear Plant by fiscal year 2021, 
as set forth in the Energy Policy Act of 2005. Initial R&D results have 
been favorable, but DOE officials consider this schedule to be 
challenging, given the amount of R&D that remains to be conducted. For 
example, DOE officials told us that researchers have successfully 
demonstrated in a laboratory setting the manufacturing of nuclear fuel 
for the reactor, which is critical to the plant's operation. The first 
of eight planned experiments to irradiate the fuel in order to test how 
well it performs will not begin until early in fiscal year 2007, and 
the final experiment is not scheduled to end until fiscal year 2019. 
DOE plans to initiate design work in fiscal year 2011, but only if the 
R&D results support proceeding with design and construction of the 
plant. With regard to licensing the Next Generation Nuclear Plant, DOE 
and NRC are in the process of finalizing a memorandum of understanding 
so that the two agencies can work together to develop a licensing 
strategy by August 2008, as required by the Energy Policy Act of 2005. 
In the long term, NRC will need to address "skill gaps" related to the 
agency's capability to license a gas-cooled reactor such as the Next 
Generation Nuclear Plant. A 2001 NRC assessment identified these skill 
gaps, but the commission has taken limited action to address them 
because until recently it had not anticipated receiving a license 
application for a gas-cooled reactor. 

DOE's approach to ensuring the commercial viability of the Next 
Generation Nuclear Plant is to significantly advance existing gas- 
cooled reactor technology in order to support the development of a 
plant design that utilities and other end users will be interested in 
deploying to help meet the nation's energy needs. For example, if 
successful, DOE's R&D would enable the reactor to operate at a higher 
temperature compared with other high-temperature gas-cooled reactors. 
The higher temperature would result in more efficient fuel use and 
hydrogen production and thus would be a more economically attractive 
plant. In addition, DOE is seeking industry involvement on the design 
of the plant and the business considerations for deploying it. In some 
cases, DOE officials' views on how best to achieve technological 
advances and ensure the commercial viability of the plant differ from 
the two independent advisory groups that have reviewed DOE's plans, and 
DOE has implemented some but not all of the advisory groups' 
recommendations. For example, in accordance with a recommendation of 
the Independent Technology Review Group, DOE lessened the need for R&D 
on advanced materials by lowering the planned operating temperature of 
the reactor from 1,000 degrees Celsius to no more than 950 degrees 
Celsius. In contrast, DOE has not implemented recommendations to scale 
back other planned technological advances or accelerate its schedule 
for completing the plant. For example, the Nuclear Energy Research 
Advisory Committee had recommended accelerating the schedule to make 
the plant more attractive to industry compared with other advanced gas- 
cooled reactors that may be available sooner and thus attract greater 
industry participation. 

DOE believes accelerating the project would increase project risk--for 
example, the risk of cost overruns or a failure to meet project 
specifications--and would require significant additional resources that 
are not in keeping with the department's current priorities. According 
to DOE officials, additional R&D conducted early in the project would 
reduce overall project risk but would require additional resources. 
However, DOE has limited funding for nuclear energy R&D and has given 
other projects, such as developing the capability to recycle fuel from 
existing nuclear power plants, priority over the Next Generation 
Nuclear Plant. 

Background: 

One of DOE's strategic goals is to promote a diverse supply of 
reliable, affordable, and environmentally sound energy. To that end, 
DOE is promoting further reliance on nuclear energy under the 
administration's National Energy Policy.[Footnote 6] According to DOE 
officials, the department has three priorities for promoting nuclear 
energy. The first priority is deploying new advanced light water 
reactors under the Nuclear Power 2010 program. The second priority is 
the Global Nuclear Energy Partnership, launched in February 2006. The 
partnership's objectives are to demonstrate and deploy new technologies 
to recycle nuclear fuel and minimize nuclear waste, and to enable 
developing nations to acquire and use nuclear energy while minimizing 
the risk of nuclear proliferation. The third priority is R&D on the 
Next Generation Nuclear Plant. According to DOE officials, the 
department remains committed to this project even though the Global 
Nuclear Energy Partnership has assumed a higher priority. 

DOE is engaged in R&D on the Next Generation Nuclear Plant as part of a 
larger international effort to develop advanced nuclear reactors 
(Generation IV reactors) that are intended to offer safety and other 
improvements over the current generation of nuclear power plants 
(Generation III reactors). DOE coordinates its R&D on advanced nuclear 
reactors through the Generation IV International Forum, chartered in 
2001 to establish a framework for international cooperation in R&D on 
the next generation of nuclear energy systems.[Footnote 7] In 2002, the 
Generation IV International Forum (together with DOE's Nuclear Energy 
Research Advisory Committee) identified what it considered the six most 
promising nuclear energy systems for further research and potential 
deployment by about 2030. DOE has selected one of the six advanced 
nuclear systems--the very-high-temperature reactor--as the design for 
its Next Generation Nuclear Plant, in part because it is considered to 
be the nearest-term reactor design that also has the capability to 
produce hydrogen. According to DOE officials, the very-high-temperature 
reactor is also the design with the greatest level of participation 
among the Generation IV International Forum members. 

Furthermore, the very-high-temperature reactor builds on previous 
experience with gas-cooled reactors. For example, DOE conducted R&D on 
gas-cooled reactors throughout the 1980s and early 1990s, and two gas- 
cooled reactors have previously been built and operated in the United 
States. The basic technology for the very-high-temperature reactor also 
builds on previous efforts overseas, in particular high-temperature gas-
cooled reactor technology developed in England and Germany in the 
1960s, and on technologies being advanced in projects at General 
Atomics in the United States, the AREVA company in France, and at the 
Pebble Bed Modular Reactor company in South Africa. In addition, Japan 
and China have built small gas-cooled reactors. 

DOE Has Made Initial Progress Toward Meeting Near-Term Milestones for 
the Next Generation Nuclear Plant: 

DOE has developed a schedule for the R&D, design, and construction of 
the Next Generation Nuclear Plant that is intended to meet the 
requirements of the Energy Policy Act of 2005, which divides the 
project into two phases. For the first phase, DOE has been conducting 
R&D on fuels, materials, and hydrogen production. DOE also recently 
announced its intent to fund several studies on preconceptual, or 
early, designs for the plant. DOE plans to use the studies, which are 
expected to be completed by May 2007, to establish initial design 
parameters for the plant and to further guide R&D efforts. 

DOE is planning to begin the second phase in fiscal year 2011 by 
issuing a request for proposal that will set forth the design 
parameters for the plant. If R&D results at that time do not support 
the decision to proceed, DOE may cancel the project. Assuming a request 
for proposal is issued, DOE is planning to choose a design by 2013 from 
among those submitted by reactor vendors. Construction is scheduled to 
begin in fiscal year 2016, and the plant is expected to be operational 
by 2021. In addition, DOE is planning for the appropriate licensing 
applications for the plant to be submitted for NRC review and approval 
during the second phase of the project. See figure 1 for the overall 
Next Generation Nuclear Plant project schedule. 

Figure 1: Next Generation Nuclear Plant Project Schedule: 

[See PDF for image] 

Source: DOE. 

[End of figure] 

As scheduled by DOE, the Next Generation Nuclear Plant project is 
expected to cost approximately $2.4 billion, part of which is to be 
funded by industry. According to DOE officials, the department budgeted 
about $120 million for the project from fiscal years 2003 through 2006. 
This amount includes about $80 million for R&D on the nuclear system of 
the plant and about $40 million for R&D on the hydrogen production 
system. 

Initial research results since DOE initiated R&D on the Next Generation 
Nuclear Plant project in 2003 have been favorable, but the most 
important R&D has yet to be done. For example, DOE is planning a series 
of eight fuel tests in the Advanced Test Reactor at Idaho National 
Laboratory. Each test is a time-consuming process that requires first 
fabricating the fuel specimens, then irradiating the fuel for several 
years, and finally conducting the postirradiation examination and 
safety tests. DOE is at the beginning of the process. In particular, 
DOE officials said they have successfully fabricated the fuel for the 
first test and addressed previous manufacturing problems with U.S. fuel 
development efforts in which contaminants weakened the coated particle 
fuel. However, the irradiation testing of the fuel in the Advanced Test 
Reactor has not yet begun. The first test is scheduled to begin early 
in fiscal year 2007 and to be completed in fiscal year 2009. The eighth 
and final test is scheduled to begin in fiscal year 2015, and the fuel 
testing program is scheduled to conclude in fiscal year 2019. As a 
result, DOE will not have the final results from all of its fuel tests 
before both design and construction begin.[Footnote 8] While DOE has 
carefully planned the fuel tests and expects favorable results, a DOE 
official acknowledged that they do not know if the fuel tests will 
ultimately be successful. 

DOE is also at the beginning stages of R&D on other key project areas 
such as the hydrogen production system for the plant and materials 
development and testing. For example, Idaho National Laboratory 
successfully completed a 1,000-hour laboratory-scale test of one of two 
potential hydrogen production systems in early 2006. DOE ultimately 
plans to complete a commercial-scale hydrogen production system for 
demonstration by fiscal year 2019, which will allow time to test the 
system before linking it to the very-high-temperature reactor. DOE also 
has selected and procured samples of graphite--the major structural 
component of the reactor core that will house the nuclear fuel and 
channel the flow of helium gas--and designed experiments for testing 
the safety and performance of the samples. Nevertheless, much of the 
required R&D for the graphite has not yet begun and is not scheduled to 
be completed until fiscal year 2015. 

Regarding licensing of the plant, DOE and NRC are in the process of 
finalizing a memorandum of understanding that will establish a 
framework for developing a licensing strategy. As required by the 
Energy Policy Act of 2005, DOE and NRC are to jointly submit a 
licensing strategy by August 2008.[Footnote 9] NRC has drafted a 
memorandum of understanding and submitted it to DOE, but its approval 
has been delayed by additional negotiations on details of the 
agreement. Nevertheless, NRC has already taken certain other actions to 
support licensing the Next Generation Nuclear Plant. In particular, NRC 
has been developing a licensing process that could be used for advanced 
nuclear reactor designs and that would provide an alternative to its 
current licensing framework, which is structured toward light water 
reactors. 

In addition to developing a licensing strategy, NRC will need to 
enhance its technical capability to review a license application for a 
gas-cooled reactor, such as the Next Generation Nuclear Plant. In 2001, 
NRC completed an assessment of its readiness to review license 
applications for advanced reactors. The assessment identified skill 
gaps in areas such as accident analysis, fuel, and graphite, which 
apply to gas-cooled reactors.[Footnote 10] Furthermore, NRC identified 
a "critical" skill gap in inspecting the construction of a gas-cooled 
reactor. As a result of its 2001 assessment, NRC issued a detailed plan 
in 2003 to address the gaps in expertise and analytical tools needed to 
license advanced reactors, including gas-cooled reactors. However, NRC 
has since taken limited steps to enhance its technical capabilities 
related to gas-cooled reactors because, until recently, it had not 
anticipated receiving a license application for a gas-cooled reactor. 

DOE Is Pursuing a More Technologically Advanced Approach Than Other 
Options in an Effort to Ensure the Plant's Commercial Viability: 

DOE is beginning to obtain input from potential industry participants 
that would help DOE determine its approach to ensuring the commercial 
viability of the Next Generation Nuclear Plant. In the interim, DOE is 
pursuing a more technologically advanced approach--with regard to size, 
fuel type, and the coupling of electricity generation and hydrogen 
production in one plant--compared with the recommendations of the 
Independent Technology Review Group and the Nuclear Energy Research 
Advisory Committee. These technological advances require substantial 
R&D on virtually every major component of the plant. For example, the 
advanced uranium fuel composition that DOE is researching is not proven 
and requires fundamental R&D. 

The Independent Technology Review Group cautioned that attempting to 
achieve too many significant technological advances in the plant could 
result in it becoming an exercise in R&D that fails to achieve its 
overall objectives, including commercial viability. Another key factor 
likely to affect the plant's commercial viability is the time frame for 
its completion. For example, the plant's commercial attractiveness 
could be affected by competition with other high-temperature gas-cooled 
reactors under development and potentially available sooner, such as 
one in South Africa, although these other reactor designs would also 
need to be licensed by NRC before being deployed in the United States. 

DOE acknowledges the risk of designing and building a plant that is not 
commercially viable and has taken initial steps to address this 
challenge. For example, DOE has established what it considers to be 
"aggressive but achievable" goals for the plant, such as producing 
hydrogen at a cost low enough to be competitive with gasoline. 
Furthermore, DOE is beginning to obtain industry input to help the 
department develop an approach for ensuring the commercial viability of 
the plant. DOE initiated two efforts in July 2006 to obtain input from 
industry on the design of the plant and the business considerations of 
deploying the plant. Specifically, DOE announced its intent to fund 
multiple industry teams to develop designs (and associated cost 
estimates) for every aspect of the plant, including the reactor and 
hydrogen production technology, by May 2007. In addition, DOE began 
participating in meetings with representatives from reactor vendors, 
utilities, and potential end users in order to obtain their insight 
into the market conditions under which the plant would be commercially 
viable. Until DOE develops a better understanding of the business 
requirements for the Next Generation Nuclear Plant, DOE is conducting 
R&D to support two distinct designs of the very-high-temperature 
reactor--pebble bed and prismatic block--rather than focusing on one 
design that may ultimately be found to be less commercially 
attractive.[Footnote 11] 

As recommended by the Independent Technology Review Group, DOE revised 
its R&D plans to lessen the technological challenges of designing and 
building the Next Generation Nuclear Plant. Most importantly, it 
reduced the planned operating temperature of the reactor from 1,000 
degrees Celsius to no more than 950 degrees Celsius. According to Idaho 
National Laboratory officials, this small reduction is significant 
because it enables DOE to use existing metals rather than develop 
completely new classes of materials. 

DOE, however, has not adopted other recommendations--in particular to 
revise its R&D plans to focus on a uranium dioxide fuel kernel, which 
has been more widely used and researched than the advanced uranium 
oxycarbide fuel kernel DOE is currently researching.[Footnote 12] The 
Independent Technology Review Group considered DOE's fuel R&D plan on 
an advanced uranium fuel composition more ambitious than necessary and 
concluded that focusing on the more mature fuel technology would reduce 
the risk of not meeting the schedule for the plant. Nevertheless, DOE 
has continued to focus on the advanced uranium oxycarbide fuel because 
it has the potential for better performance. DOE officials also told us 
that the most significant challenge with regard to the fuel is not its 
composition but rather the coatings, which is independent of the fuel 
kernel composition. To respond to the recommendation, DOE decided to 
test the performance of the two types of fuel kernels side-by-side as 
part of its fuel R&D plan. 

The Nuclear Energy Research Advisory Committee also recommended that 
DOE re-evaluate the project's dual mission of demonstrating both 
electricity and hydrogen production. Although the advisory committee 
did not recommend what the project's focus should be--electricity 
generation or hydrogen production--it wrote that the dual mission would 
be much more challenging and require more funding than either mission 
alone. Instead, DOE's R&D is currently supporting both missions, and 
DOE officials said they consider the ability to produce hydrogen (or to 
use process heat for other applications) key to convincing industry to 
invest in the Next Generation Nuclear Plant rather than advanced light 
water reactors similar to the current generation of nuclear power 
plants operating in the United States. 

Moreover, a key Nuclear Energy Research Advisory Committee 
recommendation was to accelerate the project and deploy the plant much 
earlier than planned by DOE in order to increase the likelihood of 
participation by industry and international partners. Representatives 
of the Nuclear Energy Institute, which represents utilities that 
operate nuclear power plants, also told us that accelerating the 
project would increase the probability of successfully commercializing 
the plant. As one possible approach to acceleration, the advisory 
committee further recommended that DOE design the Next Generation 
Nuclear Plant to be a smaller reactor that could be upgraded and 
modified as technology advances. However, DOE officials consider the 
advisory committee's schedule high risk and doubt that the degree of 
acceleration recommended could be achieved. Furthermore, according to 
DOE officials, a smaller reactor would require the same R&D as a larger 
reactor but would not support future NRC licensing of a full-scale 
plant, which is critical to the plant's commercial viability. 

Idaho National Laboratory officials also consider the schedule proposed 
by the advisory committee to be high risk, potentially resulting in the 
need to redo design or construction work. Nevertheless, the laboratory 
has also proposed accelerating the schedule, though to a lesser extent 
than recommended by the advisory committee. According to laboratory 
officials, if DOE does not begin design sooner than currently planned, 
too much R&D and design work will be compressed into a short time frame 
after DOE begins design in fiscal year 2011, and the department will 
not be able to complete the plant by fiscal year 2021. Consequently, 
the laboratory has proposed beginning design earlier than planned by 
DOE, which would also reduce the scope of the R&D by focusing on fewer 
design alternatives. The laboratory's proposed schedule would result in 
completing the plant up to 3 years earlier than under DOE's schedule. 
While the laboratory's proposed schedule would slightly reduce the 
project's total cost estimate, it would require that DOE provide more 
funding in the near term. For example, in fiscal year 2007, Idaho 
National Laboratory estimates that R&D on the very-high-temperature 
reactor design would need to be increased from $23 million (the amount 
requested by DOE in its fiscal year 2007 budget submission) to $100 
million. 

DOE officials believe that the laboratory's current proposed schedule 
is the best option for the plant and stated that they would consider 
accelerating it if there were adequate funding and sufficient demand 
among industry end users to complete the project sooner. In addition, 
DOE officials said that even if the schedule is not accelerated, 
increasing the funding for the project would enable additional R&D to 
be conducted to increase the likelihood that the plant is completed by 
fiscal year 2021. For example, DOE officials stated that its current 
R&D plans for the very-high-temperature reactor design could support 
doubling the department's fiscal year 2007 budget request of $23 
million. However, DOE has limited funding for nuclear energy R&D and 
has given other projects, such as developing the capability to recycle 
fuel from existing nuclear power plants, priority over the Next 
Generation Nuclear Plant. 

Concluding Observations: 

While DOE is making progress in implementing its plans for the Next 
Generation Nuclear Plant, these efforts are at the beginning stages of 
a long project and it is too soon to determine how successful DOE will 
be in designing a technically and commercially viable plant. As we note 
in our report, it is also too soon, in our view, to support a decision 
to accelerate the project. Accelerating the schedule would require that 
DOE narrow the scope of its R&D and begin designing the plant before 
having initial research results on which to base its design decisions. 
This could result in having to redo work if future research results do 
not support DOE's design decisions. In addition, DOE has only recently 
begun to systematically involve industry in the project. Such input is 
critical to key decisions, such as whether DOE should design a less 
technologically advanced plant that is available sooner rather than a 
larger, more technologically advanced plant that requires more time to 
develop. Finally, DOE's history of problems managing large projects on 
budget and within schedule raises concerns about the department's 
ability to complete the Next Generation Nuclear Plant in the time frame 
set forth in the Energy Policy Act of 2005, and accelerating the 
schedule would only add to these concerns. 

Mr. Chairman, this concludes my prepared statement. I would be happy to 
respond to any questions that you or other Members of the Subcommittee 
may have. 

GAO Contact and Staff Acknowledgments: 

For further information about this testimony, please contact me at 
(202) 512-3841 or wellsj@gao.gov. Raymond H. Smith Jr. (Assistant 
Director), Joseph H. Cook, John Delicath, and Bart Fischer made key 
contributions to this testimony. 

FOOTNOTES 

[1] Pub. L. No. 109-58 (2005). 

[2] Idaho National Engineering and Environmental Laboratory, Design 
Features and Technology Uncertainties for the Next Generation Nuclear 
Plant, INEEL/EXT-04-01816 (Idaho Falls, Idaho; June 30, 2004). 

[3] The Nuclear Energy Research Advisory Committee was established in 
1998 to provide independent advice to DOE on complex science and 
technical issues associated with the planning, management, and 
implementation of DOE's nuclear energy program. 

[4] GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: 
January 2005); and High-Risk Series: An Update, GAO-03-119 (Washington, 
D.C.: January 2003). 

[5] GAO, Hanford Waste Treatment Plant: Contractor and DOE Management 
Problems Have Led to Higher Costs, Construction Delays, and Safety 
Concerns, GAO-06-602T (Washington, D.C.: Apr. 6, 2006). 

[6] While DOE is the federal agency tasked with promoting nuclear 
energy, NRC is responsible for ensuring public health and safety with 
regard to nuclear power. 

[7] Members of the Generation IV International Forum include Argentina, 
Brazil, Canada, the European Atomic Energy Community (Euratom), France, 
Japan, South Africa, South Korea, Switzerland, the United Kingdom, and 
the United States. In July 2006, DOE announced that China and Russia 
are also expected to join the forum. 

[8] Under DOE's fuel R&D plan, the results from the first six tests 
would be available before construction begins, and the results from the 
final two tests would be available before completion of the plant. 

[9] The act also directs DOE to seek NRC's active participation 
throughout the duration of the project--for example, to avoid design 
decisions that would compromise safety or impair the accessibility of 
safety-related components for inspection and maintenance. 

[10] As defined in the Future Licensing and Inspection Readiness 
Assessment, published by NRC in September 2001, skill gaps occur when 
individuals with technical expertise are working in other areas within 
the agency, are near retirement or are expected to leave the agency, or 
do not exist in the agency. 

[11] The pebble bed design uses fuel particles formed into billiard- 
ball-size graphite spheres that slowly move through the reactor core in 
a continuous refueling process. In the prismatic block design, fuel 
particles are formed into cylindrical rods that are loaded into large 
graphite blocks making up the reactor core, which is periodically 
refueled in a batch process. 

[12] The fuel is composed of a small uranium kernel that is coated with 
several protective layers. Whereas the more widely researched fuel 
kernel is composed of uranium dioxide, the advanced composition 
incorporates both uranium dioxide and uranium oxycarbide. 

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