Senator GORE. As I understand your position, it is that you think the development of economic atomic power can be brought about in a reasonable time only by the Government itself demonstrating the feasibility and successful method of construction and operation of an atomic powerplant. Mr. BALLOU. That is 100 percent correct. Senator GORE. You, as a public utility executive, take the view, then, that such an act on the part of the Government would open the door for the construction and operation of such a plant by the city of Holyoke, Mass. Mr. BALLOU. That is right. Senator GORE. Now let me ask you if you think that this would be a boon and an advantage and open the door of opportunity to your utility, why would not that be true of a private utility? Mr. BALLOU. It certainly would, sir. Senator GORE. Thank you. That calls for a statement on my part. I have viewed this proposal as being one of the greatest boons to private enterprise. Once a successful economic means of constructing, operating, and generating atomic power has been demonstrated, then atomic power will blossom and bloom under the auspices and profitable operation of private enterprise. Until that is demonstrated, private enterprise will continue under pressure and continue to lose money, and the American people will continue to suffer the tardiness of atomic power development. Mr. BALLOU. I agree with you, sir. The only really true free competitive enterprise system in the utility business is the manufacturer, and he is the one who is suffering at the present time. Senator GORE. The manufacturing business which would supply to you, if you were to buy a reactor, the parts, the instrumentation, the generators, et cetera, is identically the same manufacturing industry that would supply them to Consolidated Edison or to the Pacific Edison or whatever private concern wanted to buy a reactor. Mr. BALLOU. That is right. Senator GORE. The utility concerns, whether public or private, are not in the business of manufacturing reactor parts, generator parts, or indeed parts of any sort. Mr. BALLOU. That is right. They are interested in buying them at the best price possible. Senator GORE. If the Government demonstrates the feasibility and economic advantage of this, then not only will the manufacturing industry benefit, but the utility industry, whether public or private, will vastly benefit and the public likewise. Mr. BALLOU. That is our feeling. Senator GORE. Thank you, Mr. Chairman. The CHAIRMAN. Mr. Ballou, on page 3 of your statement you state "The greatest single problem to be encountered was the requirement of the Atomic Energy Commission that the proposal submit a closedend proposal," a fixed price. Do you think that the main reason for rejection of your proposal was that you could not meet that requirement, or was it the very fact that there was no guide or protoype of the gas-cooled reactor? Do you feel that the chief objection of the AEC and its reason for turning down your proposal was the fact that you could not have a fixed price on the parts, the reactors and everything else? Mr. BALLOU. I will say that that was the problem in the beginning, but as our proposal was finally revised and finally sent to the Commission we had fixed closed-end prices. We gave them not only closed-end prices, we gave them maximum-cost prices. In other words, the opportunity was there for negotiation downward. We had a maximum fixed price established for all phases of our proposal. We had the proposal broken down into three distinct phases the preconstruction research and development which had a fixed maximum cost price tag, the construction phase which had a fixed maximum price tag, and the postconstruction research and development period which also had a fixed-price tag. So we met fully the criteria of the Commission in this regard. There was no objection on the part of the Commission to that particular point. The CHAIRMAN. Where did that put the risk? Mr. BALLOU. It put the risk on the Ford Instrument Co. and the city of Holyoke, if you will. The CHAIRMAN. In other words, they assumed all the risk for the whole design and completion of the reactor. Mr. BALLOU. That is right, sir. If I may say, the Ford Instrument Co. stood ready to protect the city of Holyoke. The CHAIRMAN. Mr. Kilday? Representative KILDAY. No questions. The CHAIRMAN. Thank you very much, Mr. Ballou. (The Ford Instrument Co. statement and pertinent correspondence with the AEC regarding the Holyoke proposal follow :) STATEMENT PREPARED FOR THE STATUTORY HEARINgs of the JOINT COMMITTEE ON ATOMIC ENERGY BY THE FORD INSTRUMENT CO. DIVISION, SPERRY RAND CORP. In response to an invitation of the Joint Committee on Atomic Energy, it is our pleasure to respond with a statement concerning our views on the progress and on the needs of industry in order to accelerate the progress in the development of nuclear energy for peaceful uses. Ford Instrument Co., a division of the Sperry Rand Corp., employs at the present time approximately 2,800 people. The company's main activity since its founding in 1915 has been the design, development, and manufacture of controls, computers, and instruments for use by agencies of the Defense Department and, more recently, the Atomic Energy Commission. In 1953, we established a nuclear engineering department which has been engaged in the development and manufacture of reactor instrumentation and controls and in engineering studies of new reactor systems. After several years of study, we have concluded that a system using a gascooled reactor offered one of the best means of furnishing energy which would be competitive with normal fuels and, in combination with a closed cycle gas turbine utilizing the same reactor gas coolant, would provide an economical, efficient, simple, and safe power system. While such a system would be restricted for the present to installations supplying between 5,000 and 30,000 kilowatts of electrical energy due to current design limitations in turbine size, there would be in our opinion be innumerable applications for a power unit of this size in ship propulsion, remote military installations, high-cost fuel areas in this country, and in almost all other areas in the world where large powerplants are impractical because of lack of power distribution networks. We have also concluded that, using an efficient plant of this type, essentially automatic, a series of units spaced around a large municipality or across a sparse area would probably prove more economical and would certainly minimize the vulnerability to attack now presented by extensive interlocking networks depending upon large central stations. Our engineering studies to date demonstrate the theoretical feasibility of the gas-cooled reactor system, and at the same time have indicated areas where considerable experimentation is required in order to demonstrate the practicability of the system. Such experimentation, as well as the research and development work required to demonstrate the feasibility of the entire system, requires the expenditure of considerable sums of money, the investment of a great amount of engineering time and effort, use of facilities, some of which are not available at present, and, upon completion of the research phases, construction and operation of a pilot plant. The cost to carry out the full program, estimated at over $10 million, is beyond that which an individual company would ordinarily be able to bear. Furthermore it is our understanding that it is the policy of the Atomic Energy Commission to sponsor research into just such areas of general application as this, since the results of a successful program on the gas-cooled reactor system would provide broad benefits to commerce and industry both at home and abroad. Some progress has been made. We have received modest support from the Commission in sponsoring further studies of the gas-cooled reactor system. The Commission has also undertaken the program known as the gas-cooled reactor experiment, a program devoted largely to experimentation in the lower power ranges for the specific requirements of certain military applications. This program will undoubtedly furnish certain valuable data in the future. There are, however, many additional areas requiring exploration and proving out in order to demonstrate the feasibility of a power generating system, using the gas-cooled reactor, closed cycle turbine system in the area of more efficient and economical operation, in considerably higher power capacities. We believe, therefore, that full-scale program of research and development can and should be undertaken with the immediate objective of advancing the solution of problems in a gas-cooled reactor system. Such a program was proposed to the Commission, under its second round reactor demonstration program, jointly by the city of Holyoke, Mass., and Ford Instrument Co., and included an offer to provide, at our expense, the special facilities, not now available, which are necessary in order to conduct certain phases of development on the gas-cooled reactor system. This proposal was rejected on the basis that the technical feasibility of the proposed plant would be contingent on the resolution of certain basic questions. Representatives of the Commission have stated that there are at present insufficient funds to allocate to an expanded research and development program for the gas-cooled reactor power system. It is our understanding that support is available under the second and third round demonstration programs for research and development work on projects which are to result in construction, within a defined time limit, of specific generating plants, but that support for experimentation aimed at demonstrating the feasibility or lack of feasibilityof a potentally valuable system not yet advanced enough to justify the obligating of actual plant construction is restricted by existing fund limitations. While there has been considerable interest in this country and abroad in the status and progress of our work in the gas-cooled reactor system, neither we nor anyone else are as yet in a position to guarantee the feasibility of plant operation prior to completion of a program of experimental work. We believe it is the intention of Congress that the Atomic Energy Commission should encourage progress in peaceful uses of nuclear energy by sponsoring research and development in new and improved reactor systems, with industry participating by significant contributions of manpower, equipment, and some facilities. We therefore believe that the Congress should make funds available to the Commission which will permit them to accomplish this end, without the requirement for actual commitments for construction of plants until an advanced type of reactor has been proven feasible by research and development. With Government support for feasibility proof, we believe there will be adequate industry acceptance of the risk involved in construction and operation of such plants, contingent only upon Government indemnity for liabilities beyond available insurance limits. FORD INSTRUMENT Co., DIVISION OF SPERRY RAND CORP., LONG ISLAND CITY, N. Y., February 18, 1957. Mr. K. E. FIELDS, MARCH 2, 1957. General Manager, United States Atomic Energy Commission, Washington, D. C. DEAR MR. FIELDS : Mr. Durham asked me to request the Commission's comments on a telegram we recently received from the city of Holyoke, Mass., gas and electric department, which stated as follows: "It is understood that Dr. Davis, Director of Reactor Development, has stated in testimony before your committee in response to a question by you that AEC cannot see its way clear to committing itself to constructing a plant where there are so many test problems and uncertainties involved. The Director of Reactor Development of AEC apparently does not understand the terms of the Holyoke proposal. The Holyoke proposal does not require any such commitment until test problems and uncertainties are satisfactorily resolved." It would be appreciated if you would arrange for appropriate Commission representatives to review Mr. Ballou's testimony and the statement by the Ford Instrument Division of Sperry-Rand, together with comments by Commission representatives during the 202 hearings with a view to explaining or reconsidering the Commission's action on the Holyoke proposal. Sincerely yours, JAMES T. RAMEY, Executive Director. Mr. JAMES T. RAMEY, ATOMIC ENERGY COMMISSION, Washington, D. C., March 22, 1957. Executive Director, Joint Committee on Atomic Energy, Congress of the United States. DEAR MR. RAMEY : Reference is made to your letter of March 2, 1957, requesting further explanation of the Commission's action on the proposal from Holyoke and the Ford Instrument Division of Sperry-Rand under the Commisison's power demonstration reactor program. The telegram from the city of Holyoke quoted in your letter noted that the proposal did not require a commitment to construct a plant until test problems and uncertainties are satisfactorily resolved. The primary purpose of the power demonstration part of the Commission's civilian power reactor program is to stimulate industrial participation in the application of nuclear power technology. A reasonable amount of research and development is considered justifiable in connection with nuclear power demonstration projects. This supporting research and development should be for the purpose of providing engineering design data, developing and testing major components, and improving the economics of the nuclear plant performance. It is not considered appropriate to enter into these projects when they involve major questions of technical feasibility to be resolved in a supporting research and development effort. There are more satisfactory and, we believe, more logical and workable ways of conducting research and development of this type. Obviously, there is a judgment factor involved in evaluating technical feasibility and timeliness of projects proposed under the power demonstration reactor program. In this connection, it may be helpful to review specific action taken on proposals received by the Commission and considered along with the HolyokeFord Instrument Co. proposal. This is done in the attached table. To summarize, it was and still is our conclusion that the reactor concept included in the Holyoke proposal represented numerous technical uncertainties of a nature and degree to render it inadvisable to make any present arrangements, either of a firm or contingent nature, leading to construction and operation of a demonstration plant. It is our belief that the best course is rather to carry out present plans for exploration of high-temperature gas-cooled reactor problems by means of the gas-cooled reactor experiment and other research and development efforts within our current program. Mr. Davis' testimony referred to by the city of Holyoke telegram was based on this conclusion. I trust the above discussion will be of assistance to you. Sincerely yours, K. E. FIELDS, General Manager. Commission action as announced “* * * approved in principle, as a basis for negotiations, “* * * authorized the negotiation of contract provisions Comments Technical feasibility of boiling water concept well estab- There is no question of basic technical feasibility of this |