Tom Christopher ,
President and CEO,
Framatome Technologies Group
Matching the Evolving Industry

Deregulation in the U.S. power industry is rapidly accelerating and will affect all of us directly and indirectly. Independent system operators (ISO) are in operation in several regions of the country-California, PJM, Northeast and already several (at least six) nuclear plants have been removed from the rate base. If they do not operate, they will lose 90 percent of their revenue.

As the price of power changes in the deregulated market, utilities will be impacted immediately. Companies could face a situation in which 50 to 70 percent of the year, the price of power would be equal to, or less than, their variable plus fixed costs, and 80 percent of the financial return might come only during the key summertime price surges. Last summer, for example, a 900 MW unit in the northeast would have generated a $32M profit in a single day when the price peaked at $6,000/MWh.

Against these rapidly changing market demands, even the term OEM assumes new meaning. An OEM with the original equipment design basis was a valued contributor in the first five to ten years of a nuclear plant's life. However, equipment modifications, a detailed performance history, and maintenance and repair knowledge will provide the operational basis for the required reliability demanded in the future. Today's OEM will have world-class experience and proven performance over the long haul.

We believe the recently announced joint venture between Framatome and Siemens brings this new OEM definition into clear focus. Both companies designed, developed and produced reactors and have close relationships with the operators of the French PWRs, and the German PWRs, BWRs, and HWRs. These relationships enabled them to develop and maintain a component and system performance history unmatched in the world. For example, the combined reactor operating life of the Framatome 3-loop PWRs exceeds that of the W 3-loop PWRs 898 reactor years to 534 reactor years.

We are already expanding our capabilities in the U.S. with our new reactor coolant pump (RCP) parts and service business center. Using the extensive RCP performance analysis experience of Jeumont Industrie (with more than 200 RCPs in operation worldwide), we can also perform life analysis - including meantime between failure analyses on RCP seals - unavailable anywhere else in the world.

You will be hearing more about the joint venture in the near future and how it can enhance power plant operations and help utilities achieve the reliability required to move profitably into the future.

Our sights are set. Our path is clear. We intend to be your OEM for the second half of the U.S. nuclear industry's life.