APPENDIX

Example of a Hypothetical Strategic Plan

FOREWORD

It will be useful to consider that the primary audiences and beneficiaries of the strategic planning effort are the following:

The Secretary, Deputy Secretary, and Under Secretary—in determining long-term strategic directions and policies for the Department and for making the final decisions on near-term resource allocations and priorities. In briefings with the Secretary on strategic plans, it will be very helpful for the Secretarial Officers to highlight the changes and differences between the situation, outlook, and assumptions that now exist and those which existed at the time of the last review. Focusing most of the discussions on the new or modified objectives, issues and proposed strategies will be most productive.

Secretarial Officers—in clarifying missions, reviewing the present situation, identifying clients and customers, and highlighting long-term (beyond the next few years) objectives, issues, and strategies.

Administrators, Program Developers, and Implementers—in providing guidance to those who are responsible for developing 5- year as well as shorter-term implementation plans and for seeing that the job gets done.

The purpose of strategic planning is to focus the attention of the leadership on what DOE might and ought to try to accomplish and how DOE might best serve the public interest in the long term, and then to set the course to start to get there. This year’s strategic plan is not to be thought of as an immutable creation, but rather as the best "shot" of today’s leadership in view of today’s realities. Change will occur: new circumstances, new threats, new opportunities, new crises, new people, new dreams. So this year’s plan will hopefully be reviewed and changed which will enable program planning and resource allocations to be made more wisely, guided by our collective best judgment of where the organization should be in the long term.

What follows next is a "dummy" plan summary, invented just for the purpose of illustrating the kinds of contents that might constitute the summary of a strategic plan for a DOE-type program. Any resemblance to actual situations is fortuitous, and the names, dates, and terms have obviously been chosen to help emphasize that the case is entirely fictitious. For this imaginary program, a planning horizon of 35 years, to 2030, is used. This fancied summary of a number of days of intensive debate and study by the hypothetical planning team may be helpful in illustrating the kinds of summary outputs one might generate from the various elements of a strategic planning process.

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THE MISSION STATEMENT FOR THE DOE ELECTRONUCLEAR PROGRAM

The mission of the DOE electronuclear (EN) energy program is to understand the science and to develop, improve, and demonstrate the technology and, if the demonstrated economics and market needs then warrant, to facilitate the commercialization, introduction, and use of this new source of energy in the United States and by other peoples of the world, especially by developing nations. Experiments in our National Laboratories, who pioneered the basic research and development of this new energy source, convincingly show the promise of EN to provide large amounts of electricity to the public at lower overall costs and with fewer environmental impacts and at lower safety or health risks to the public than will those alternative energy sources which can supply the major electrical market needs.

DOE’s role is to stimulate and nurture the development, testing, commercialization, and use of this technology by the public and private sector and by foreign nations, especially developing countries, with as little investment and cost to the Government as required to take advantage of the great promise of this new technology for serving the public interest.

ELECTRONUCLEAR PROGRAM VISION STATEMENT—2030

By 2030 we expect this new technology to have been fully developed and be well into commercial use, replacing fossil and nuclear plants that have reached the end of their licensed life, as well as supplying new grid capacity where needed. EN technology should be generating power at total costs at least 20 percent (perhaps 50 percent ) less than competitive sources, thus meeting the Nation’s needs for abundant, cheap, domestic origin, safe, and environmentally benign power and providing the bridge needed until fusion power becomes a reality on a large scale. There should be substantive reductions in oil imports, carbon dioxide, and radwaste generation. Utilization of EN by developing countries will be a major contribution to the alleviation of hardships of their peoples. DOE’s role in this technology for the next decade will be as the prime mover and producer of the technology. In the decade 2010 to 2019, assuming success, the utilities should take over in commercializing the technology, and DOE should be able to reduce its efforts sharply. By 2020, DOE should be able to phase out all DOE work other than that required to give technical support to the Government’s regulatory agencies.

SITUATION ANALYSIS - PRESENT SITUATION AND PLANNING ASSUMPTIONS

Present Situation–1998:

The EN phenomenon, discovered by Parker at the U. of P. in 1992, was confirmed by researchers at three of the National Laboratories that same year. Research and development programs were undertaken at those Labs and at several Universities, and the potential for generating electricity soon became apparent. Because of the promise for producing electricity more economically (significantly less capital intensive) and with no hazardous or radioactive wastes and minimal environmental impacts, well-integrated major R&D programs were mounted by DOE at Universities and four National Labs. These programs, now underway, are focused on the development of the component equipment, the process, and the facilities needed for substantive demonstration of EN power generation by 2005 to 2008. Planning for the demonstration is a cooperative venture involving representatives of utilities and regulatory groups as well as the scientists and engineers, under the overall direction of DOE. Independent economic evaluations are being sponsored by several impartial groups with complete access to all DOE information. Progress thus far has been very promising. Since our last plan review, the EPRI 1998 EN Outlook has been published and confirms the current DOE projections of potential $/Mwday costs.

The DOE Position:

The DOE position today is that we have been the major funder (85 percent ), leader, and supporter of the technology thus

far. The Department of Commerce has at our request initiated a special program to improve the metrics for EN monitoring. The Utilities, both public- and investor-owned, have been extremely interested in watching progress and are funding independent studies of the potential for commercialization, but have not been willing to engage in any major cost sharing of the development work yet. At the last Annual Conference, COGEMA of France gave full reports on the work they initiated two years ago, and PNC of Japan announced successful but very small-scale pilot plant runs this year. The UKAEA continues to experience problems with maintenance of the prototype equipment we supplied them for testing.

Major Planning Assumptions:

The development of electronuclear technology will continue at its fast pace and have to overcome problems that will block or be major obstacles to successful commercialization.
Alternative sources in competition with EN (i.e., petroleum, coal, nuclear, fusion) will not achieve major breakthroughs in solving their environmental, availability, economic, or public acceptance problems.
Market demands in the U.S. for electricity will continue to follow the forecasts of the past few years, sensitive to per capita and GNP indicators. Conservation programs will

affect demand, but not more than that assumed in the official DOE forecasts.

The indications found in the EN waste recycling trials in the QNL pilot plant runs that there will be no mixed or hazardous waste effluents will be substantiated in work with larger scale process equipment and heat fluxes.
The trend toward increased regulatory

involvement in planning for capacity increases by utilities will continue making it essential that we continue our efforts to involve them in following the early stages of EN development and planning.

There will be continued pressure to reduce total DOE spending; thus, the needed EN program funding increases must continue to come from DOE reprogramming, requiring close working relationships and interchange of competitive position forecasts with alternative energy source offices.

SITUATION ANALYSIS — KEY STAKEHOLDER CONSIDERATIONS

Utilities = Major interest has been shown by both municipal, cooperative, and investor-owned utilities as the primary potential exploiters of EN technology. DOE’s Annual Grand Junction Application Conferences have been heavily attended since their inception in 1993 and, by the evaluation of the utility reps attending, have been very successful in satisfying their needs. EPRI and EEI have each sponsored independent evaluations of the overall commercial $/Mwday potential which generally confirm DOE projections. Since our last plan update, DOE has organized and invited their participation in an EN Advisory Board of American Utilities (elected by their associations and serving on a rotating basis) for the purpose of collaborating on planning strategies and cost sharing.

Universities = Ten universities and three colleges have programs in aspects of EN science which complements the work in the National Labs. These programs are partially funded (40 percent) by DOE. A continuing problem is the number of grant requests from other institutions which cannot be funded.

Regulatory Agencies and Oversight Bodies = Because of the major impact of regulatory bodies in the past on the competitive position of alternative energy sources such as nuclear, EN decided to invite representatives of the key regulatory groups to learn about EN early in its development years and to comment on planning and potential regulatory issues. This includes invitations to participate in the Annual Conferences and special briefings as desired. Members of Congress, their staffs, and other key Executive and Legislative groups are specifically included.

Other Government Agencies = There is a developing interest by NASA, the Department of State, and the Department of Transportation in EN technology. They have expressed interest in a Memorandum of Understanding and formation of a joint administrative council. We continue to believe this to be premature, pending pilot scale demonstrations, and will hold annual briefings addressing their very different interests until that demo is accomplished.

Foreign Governments = Third World and developing nations have expressed interest in EN because of its advantages compared to nuclear, fusion, oil, coal, or natural gas power plants. They have not been invited to the Annual Conferences, but DOE has held one United Nations briefing co-sponsored with the State Department and is planning another in two years. Major R&D programs are under way in France, UK, and Japan, and our Labs are watching their progress closely.

Other Sectors = Most interest to date has been in central station applications, but in the past year the number of inquiries to Headquarters and National Labs about potential applications in the automotive, transportation, and aerospace sectors make it desirable to mount a small effort at one of the Labs to assess potential applications in these areas.

Public = The public acceptance problems with nuclear power appear to carry over to EN in the reaction of the media, despite all the good efforts of the scientists, engineers, and program administrators to set the record straight.

Internal Staff = Three National Labs have had major EN program efforts for 5 or more years. Smaller support-type efforts in specialty areas have been started in many other DOE sites and private sector shops. Cooperation in the early years was almost nonexistent, but the EN Management Council instituted in 1996 has proven fairly effective. Sharing of long-range goals and objectives has led to energetic competition, not toward different objectives, but to see who can reach the common objectives first and with least resource expenditure.

SITUATION ANALYSIS — KEY TRENDS

Research and Development Programs:

The program has been underway only 5 years, and is still in the steep part of a normal learning s-curve. The progress made thus far is good. Projections suggest that total DOE spending will peak about 2008. (See chart below). DOE work should start decreasing about 2010 as commercialization either begins to take place or earlier if the potential will not be realized. Funding at the $300 million per year level is required for the next 2 years, increasing to $350 million for FY 2000 and 2001 period. The commercial small-scale demonstration project (scheduled to start design/construction in 2005 and start operation in 2015) is now scoped at $900 million (1998 dollars). The primary technology questions (threats) remain in the area of reactor reliability, availability, and maintainability. The major program issue (threat) is the problem of fully funding the ongoing R&D and the upcoming demonstration. A substantial political problem will be in the choice of location for the $900 million demonstration, which will require a decision in the 2002 time frame.

Market Demands:

DOE forecasts of demands and the contributions of the competing sources are shown below, jointly developed by the Headquarters offices. Growth is expected to somewhat lag behind GNP. (See chart below taken from the annual U.S. Energy Supply/Demand Forecasts prepared jointly by the concerned Program Offices).

Regulatory Pressures:

Due to the effective efforts early in the decade, compliance issues have essentially been resolved, and institutional and technological structures and systems are in place to assure that R&D and operations throughout DOE are responding to the current needs. The EN program is serving as a model for proactive leadership in working with regulatory groups in advance to anticipate and head off problems.

KEY STRATEGIC GOALS AND OBJECTIVES—PLANNING HORIZON TO 2030

EN Technology:

The technology will be demonstrated on a pilot scale by 2004.

By 2005 the main elements of the basic science of the EN effect will be well understood.

The commercial-scale demo will be operational by 2012, if earlier success justifies that step.

Utilization of the technology by the U.S. and by foreign utilities or governments should be improving the quality of life and saving precious fossil fuels for better uses for many people by 2030, and the EN share of the U.S. energy supply market will be 33 percent.

Compliance:

DOE will provide proactive assistance to Federal, State, and local regulatory bodies in establishing prudent regulations to assure the safety of personnel working in EN facilities and to protect the quality of human health and environment in the surrounding areas.

Environment:

By 2003, DOE will be viewed nationally as an "environmental champion"—a leader in protecting and improving the environment around its EN and other active and formerly used sites.

Safety:

DOE’s EN program will be the leader in safety (as indicated by fully integrated injury and accident statistics) among the "big power" alternate sources: coal, fission, fusion, and petroleum.

Public:

DOE will strive to achieve broad public acceptance for this power source. The goal is to develop an atmosphere of trust between DOE and the public regarding the EN program through a campaign of information and participation that highlights DOE’s mission of safety and efficiently serving the public interest.

Facilities:

Until 2015, DOE will provide and maintain a facility asset base at those National Labs involved in the EN program which will permit them to continue to support and solve problems arising in the use of EN energy until commercial industry can provide its own support, or until it is apparent EN will not become a practical energy source.

Quality & Excellence:

The EN Program will press for, stimulate, and reward improvements in EN technology, applications, and use, which will reduce the unit costs of power, $/Mwday (DOE critical success indicator, see next page).

A special objective for the near term is to reduce projected unit costs, $/Mwday (as currently projected by independent EPRI studies) by 20 percent below 1998

projections by the year 2010 (in year 1998 dollars).

Note —The categories will, of course, vary with the program under consideration, and can usually best be discerned after brainstorming and then boiling down a longer list of Objectives.

KEY PERFORMANCE INDICATORS

Key indicators of progress and success of the EN program are the following:

1. Share of the energy market supplied by EN relative to other supply sources, in percent of total U.S. quads for a given year.

2. Projected unit costs relative to other supply sources. The key performance indicator used by DOE will be the projected total costs i.e., construction, operations, safeguards and security, environmental, waste, etc.—but not R&D) over the projected life of a commercial plant divided by the projected total electricity delivered to the bus, in 1996 dollars per megawatt-day, $/Mwday.

3. The safety, health, and environmental objectives performance indicator statistics need to reflect the integrated power supply business (i.e., the data should include statistics for all the needed inputs, supplies, waste processing, etc., for a given kind of power business, not just that of the central station).

Note—The emphasis here is on the "key" performance indicators. Each one of the strategic objectives will be measurable and those performance indicators should be utilized in program self-assessments if the data are meaningful for the time period under review. But there will usually be a few "Key" performance indicators, perhaps like number two above that wraps together the impact of several objectives and will be especially useful to the Secretarial Officer and planning team for evaluating the impact of their strategic thinking and actions. These key performance indicators should be listed here.

KEY STRATEGIC ISSUES

Sharply increased funding is needed to complete the pilot scale demo and prepare for the commercial demo, but substantial cost sharing will not be negotiable until the promise of EN is more certain. Alternative sources (e.g., nuclear, fusion, coal) are competing for funds and have had much larger total investments over the years.

How can the Department phase out and discontinue work on less promising/less needed programs of long standing that still have some merit as well as a cadre of specialist experts and fragile facilities—in order to undertake new programs like EN that have a greater expected performance potential than competing technologies and greater longer-term benefit to the Nation?

How can the Department work best (in these development years) with licensing, regulatory, and oversight bodies to serve the Government’s overall interest in assuring that safe and environmentally benign electricity is available for all its people?

Limitations imposed by the Federal Power Act, Public Utility Holding Company Act, and State and local regulation unwisely inhibit development of supply options within the electric utility industry.

How can DOE provide EN technology and equipment to developing countries and at the same time protect the interests of U.S. firms that wish to market that technology for profit?

The technical problem of reuse of camerized source vessels must be solved over the next 5 years (before commercial demonstration design is ready) if waste treatment costs are to be acceptable. This is a potential fatal flaw in reaching target unit costs.

Qualitative changes in our approach to the public and to the media are needed to overcome image problems of the past and to rebuild pride and confidence in the future of electronuclear power.

KEY STRATEGIES

Cost/Productivity:

Maximize value added for each dollar spent. Ask each EN group to set their own specific productivity and quality improvement targets and liberally reward the best achievers, both organizations and leaders.

Build a pride in achievement culture in EN which demands and honors excellence and celebrates important "wins."

Service/Customers:

Work proactively to meet the needs and wants of utilities for information that will aid their planning for supplying electrical demands of the longer-term future.

Make available or facilitate the process of granting low-cost loans to utilities needing to switch from high environmental impact technology to EN.

Work with public utility commissions to modify rules so that utilities can include the cost of construction-in-progress in their rate base to encourage them to switch to EN or other less costly (overall) power technologies.

Technology:

Strive for earliest possible identification of technical, operating, management, waste, off-gas, reliability, availability, maintainability, public relations, etc., problems in applying EN technology both in this country and in foreign developing nations.

Capitalize on experience with existing power technologies by using their experts to serve on critical review panels to find "soft spots" in the developing EN technology applications.

International:

Build a favorable climate for use of EN technology by developing nations to raise the quality of life for their people.

Work toward international cooperation in R&D to share risks and costs of development.

Human Resources:

Each year, strive to hire (both in Headquarters and the Field) a few of the best new graduates in science, engineering and management to help materialize the EN vision of 2030 and to upgrade (by replacement) the quality and competitive ability of the EN program staff.

Honor top achievers who meet or exceed 5-year program objectives, and provide national recognition for the key EN program accomplishments .

Facilities:

Use only existing DOE sites for new EN facilities to minimize capital and operating costs.

Modernize existing site facilities for EN use only if and as they are required to meet EN strategic objectives.

Public Relations:

Provide not only full disclosure of all substantative problems encountered with EN technology, but also provide the media and public information about the graded or relative risks involved so as to allow full understanding of their seriousness or importance.

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