EXHIBIT IV POWER REACTOR DEVELOPMENT CO. Name of loan guarantor Central Hudson Gas & Electric Corp., Poughkeepsie, N. Y. Delaware Power & Light Co., Wilmington, Del. The Detroit Edison Co., Detroit, Mich. Iowa-Illinois Gas & Electric Co., Davenport, Iowa Wisconsin Electric Power Co., Milwaukee, Wis. -Hon. CARL T. DURHAM, SPENCER CHEMICAL CO., Kansas City, Mo., February 15, 1957. Chairman, Joint Committee on Atomic Energy, DEAR CONGRESSMAN DURHAM: This is in response to your January 18, 1957 letter concerning the activities of the Joint Committee on Atomic Energy. I should like to take this opportunity to review some of the interests of the Spencer Chemical Co. with regard to the atomic-energy program and our activities concerning this which are interrelated with our views on the suggested topics for discussion by the committee. The Spencer Chemical Co. has an access permit with the Atomic Energy Commission and has, as an adjunct to this, permission to review 15 categories of secret information. We have, as our prime interest, performing a service to the nuclear-fuel cycle, the development of high-temperature materials of construction, and the use of nuclear reactors and/or irradiation in the process industries. We have 25 "Q" cleared personnel in our employ and maintain a secured area wherein we can review classified material and perform engineering studies. Some of our engineers have had experience in chemical processing of nuclear fuels, and in studies on industrial utilization of atomic energy, prior to their present assignment. As a part of our pilot-plant program we have installed equipment to study fuel-processing phases and have obtained a license from the Commission to conduct certain work. All of this activity is privately financed and is aimed at finding phases of the overall nuclear program wherein we might perform a service. The need for scientists trained in the field of nuclear technology has been emphasized by various authorities. We believe that some help in this regard might be acquired through greater industrial participation in the various phases of atomic energy utilization. We believe that one way to acquire know-how and accomplish technical advance is through participation. For example, the chemical industry has a relatively high technical skill in the general field of thermodynamics, reaction kinetics, heat transport, heat flow, etc. We understand these principles to be similar to those encountered in nuclear technology. We believe that there are programs within the Atomic Energy Commission which can be handled successfully by the relatively unschooled, compared to nuclear physicists, and that through such participation, skills will multiply. We have in mind a possible study in which a survey of the chemical industry would be made with a view toward determining possible locations for nuclear reactors in the process industries. Such locations would be other than for the generation of electrical power. We believe that the Commission, in keeping with the Strauss program, should sponsor such activities with the twofold purpose of training technical manpower and of gaining greater assistance in the utilization of atomic energy. We have been considering for some time the reprocessing of nuclear fuels and, as stated, have installed facilities in our pilot plant to conduct tests in this regard. As a result of our review and investigation of this, we have concluded that in order to establish within the near future a private interest in the nuclear fuel processing field, assistance would be needed from the Commission. Such assistance, we propose, might be in the form of making available to private industry nuclear fuels to be processed, this processing being done on a competitive basis. Specifically, we believe scrap generated in the fabrication of fuel elements would make a good starting basis and we have made a preliminary proposal to the Commission along this lines. We are concerned with activity on the waste-disposal problem. We are especially interested in this since we represent a potential fuel processor and since it appears that the burden of waste disposal will exist at this point. Of interest to us in this field are the following: 1. Improved methods of handling waste at reduced cost. 2. Greater insight into the tolerance level of exhausted streams from processing systems. Pricing policy appears to be centered around placing a fuel value on nuclear material. We favor a more realistic pricing schedule so that the system is free of subsidies. We recognize the need for maintaining a strong security system, but we favor maintaining a degree of classification commensurate with the international level of technology. By definition, security hinders flow of information, which is incompatible with the maximum rate of technology advanced. We believe the Commission has performed an admirable task of making available information to industry. We favor more progress in this direction. With regard to the international market for reactors and components, we generally favor competitive advance of American Industry into areas which will offer stimulus to our national economy and to raising the international scale of living. The building of reactors abroad would appear to be in keeping with this. Thank you for the opportunity of presenting our views. We have read with interest many of the documents covering hearings held by the Joint Committee and want to commend you on the energy and wisdom which has gone into this activity. Sincerely yours, Hon. CARL T. DURHAM, KENNETH SPENCER, President. MIDDLE SOUTH UTILITIES, INC., Chairman, Joint Committee on Atomic Energy, DEAR MR. DURHAM: The activities of Arkansas Power & Light Co., Louisiana Power & Light Co., Mississippi Power & Light Co., and New Orleans Public Service, Inc., the four operating companies comprising the Middle South Utilities system, may be of interest to the Joint Committee in connection with its consideration of the development, growth and state of the atomic-energy industry in the hearings currently being held under section 202 of the Atomic Energy Act of 1954. In December 1956 the Atomic Energy Commission was advised that the Middle South system companies had initiated investigations for the purpose of determining the feasibility of constructing a prototype nuclear power reactor in the Middle South. The companies asked several equipment manufacturers and other organizations active in the atomic field to identify to them a conceptual design of a power reactor which, in their opinion, would contribute importantly to the advancement of reactor technology if built in prototype size. In addition, the companies asked that the reactor designs so identified be those considered by the proposers to hold promise, if later constructed in larger size, of ultimately providing an economically feasible source of energy to supplement conventional fuels in the Middle South system service area. Since reporting to the AEC in December, the Middle South system companies have received five proposals for the design and construction of power reactors în prototype size of from 15,000 to 30,000 kilowatts electrical capacity. They are now in process of analyzing and appraising in detail those proposals. This study will not be completed in time to report thereon during the 1957 section 202 hearings. The Joint Committee might be interested in knowing that among the reactor designs submitted are two reactors which would use heavy water as the modera tor and which either would be fueled with natural uranium or would be prototypes for larger reactors that would use natural uranium. Proposals also were received for designs that would utilize graphite or beryllium as the moderator and a liquid-metal coolant. Certain other electric utility companies in the general section of the country in which the Middle South system companies serve have expressed an interest in discussing with us the possibility of participating in a prototype reactor project. This matter also is being studied. Trusting that this information will be of interest to the Joint Committee, I am, Respectfully yours, E. H. DIXON, President. STATEMENT BY WILLIS GALE, CHAIRMAN, COMMONWEALTH EDISON CO. DESCRIPTION OF THE DRESDEN PROJECT The Commonwealth Edison Nuclear Power Group project was initiated through a proposal to the Atomic Energy Commission in March 1955. The plant, which will have a boiling water reactor, is to be called Dresden station and is the largest all-nuclear power-producing facility under way in this country. Its capacity will be 180,000 kilowatts. It will be located about 50 miles southwest of Chicago. Commonwealth Edison Co. has a contract with General Electric Co. for the construction of Dresden station for $45 million. Bechtel Corp. is employed by General Electric as engineer-constructor. The plant is being financed entirely with private funds. Commonwealth Edison will own and operate the plant and will pay $30 million toward the $45 million contract price. This $30 million, plus more than $5,500,000 of overhead and site costs, will be capitalized and included in Commonwealth Edison's utility plant. The $15 million remainder of the contract cost is being paid as a research and development expense over a period of 5 years by 8 companies which are associated in Nuclear Power Group, Inc., namely: American Gas and Electric Service Corp. Bechtel Corp. Central Illinois Light Co. Commonwealth Edison Co. Illinois Power Co. Kansas City Power & Light Co. Pacific Gas & Electric Co. Union Electric Co. CURRENT STATUS OF THE DRESDEN PROJECT The contract with General Electric Co. calls for monthly payments of $750,000 each in the years 1956 through 1960. There will be 60 of these monthly pay ments totaling $45 million. These consist of the $500,000 monthly payment which Commonwealth Edison makes toward its $30 million share and the $250,000 monthly payments through Nuclear Power Group, Inc., toward the $15 million of research contributions. General Electric has been paid $10,500,000 so far. By the end of 1957, payments will have totaled $18 million. The contract requires completion of the project on or before December 8, 1960. The deadline set by the Atomic Energy Commission for the initial fueling of the reactor is September 30, 1960. We are informed by General Electric that its present schedule calls for trial operation of the completed plant by July 1, 1960. General Electric, in turn, has made substantial expenditures on the project and has incurred large commitments. Since all phases of the actual design and construction of the plant are under its jurisdiction, I shall leave it for that com pany to furnish the committee full details of what has been done up to now and what is scheduled. The significant fact is that every effort is being made to complete the project at the earliest possible time. NEED FOR FEDERAL INDEMNITY LEGISLATION The Honorable Carl T. Durham's letter inviting me to make this statement calls attention to the fact that separate hearings will be held on the proposed program of governmental indemnity against reactor hazards and on proposals for accelerating the nuclear power program. I shall not go into these subjects in any detail, but I do desire to stress the importance of early action on the indemnity bill. We know of only one hurdle which could interfere with our project. That is the matter of third-party liability. The insurance industry appears to be making good progress in developing a satisfactory program for the coverage of ordinary third-party-liability risks. We consider the early solution of the problem of the catastrophe risk to be of vital importance not only to our own project but also to the progress of the country's atomic program, to the public at large, and to the builders and owners of all reactors. The joint committee indemnity bill (S. 715 introduced by Senator Anderson and H. R. 1981 introduced by Mr. Price) appears to us to represent a practical solution to the indemnity problem. We urge favorable consideration at the earliest possible date. Last year I told the committee that we are unwilling to say that we will abandon our project if the indemnity legislation is not passed. Rather, we have hoped that the committee would be convinced of the importance of the problem and the need for early action. I stated that we were going ahead full speed on our project with confidence that the Congress would act promptly and favorably on the indemnity bill. This continues to be our policy. FUEL FABRICATION AND REPROCESSING One of the greatest difficulties along the road to competitive nuclear power is the present uncertainty in the various phases of the fuel problem. The availability of suitable materials for cladding, like zirconium, at a moderate price is of the utmost importance. So is the cost of fabricating fuel elements. At the present time, it appears that prices for suitable materials and also for the fabricating of these materials will be high. No doubt prices will decline if a good volume of business develops in this field. Another area of great uncertainty is that of reprocessing spent fuel elements. At the present time, those who plan to build nuclear reactors are not informed as to the AEC policy on the disposition of fuel elements. We understand that the Commission has this matter under consideration and, in fact, may have announced its conclusion after this statement was written. We are confident that a sound policy will be worked out in due course and are proceeding on that assumption. However, it would be helpful in our planning, especially in fuel-development work, if we could know at an early date what is to happen to spent fuel. Under today's requirements, the reactor owner must pay rent to the AEC on fuel while it is being shipped to a fuel element fabricator. The rental will continue while the fuel is in the reactor but from then on there are many questions, for example: When will the rent stop? Will the AEC chemically separate it? If not, who will? What will be the charges for separation? Who will own the fission byproducts? FUEL COST DURING EARLY YEARS OF OPERATION A problem related to fuel fabrication and reprocessing is that of the probable extraordinarily high fuel cost of electricity generated during the first few years of operation of a power reactor. In the case of a conventional facility, the fuel cost is the delivered cost of coal, oil, or gas. In the case of an atomic facility, however, there is not only the Commission's charges for nuclear fuel but also the cost of cladding materials, the cost of fabrication of fuel elements, and the cost of the chemical separation of spent elements. A further vital difference is the trial and error necessary to the achievement of a satisfactorily long burn-up period. It appears that the realization of the ultimate fuel cost based on maximum efficiency will not be accomplished for a period of 5 to 6 years after start-up. During this trial and error period, the reactor owner is likely to incur very substantial excess costs. These extra costs could serve as a serious deterrent to the undertaking of otherwise worthwhile projects. The Commission has stated that it is aware of the problem and that it may do something about it. This could be accomplished through reduced charges for nuclear fuel during the early years of a reactor's operation. I believe that it would be extremely helpful in the acceleration of the reactor program, if some action of this kind were to be taken. NUCLEAR POWER GROUP ATOMIC RESEARCH The eight companies participating in the research cost of the Dresden project also conduct a combined atomic power research project under the name of Nuclear Power Group. This study group undertakes to keep abreast of all im. portant developments in the field of atomic power. The group's special interest is to consider the merits of and prospects for all of the promising power-reactor types. It also makes more detailed studies of those types which appear to be most promising for early construction. It was a detailed research study made in cooperation with General Electric Co. that led to our decision to go forward with the Dresden boiling water project. The study group has recently completed in cooperation with Babcock & Wilcox a detailed study of the homogenous reactor. At this point, I wish to comment briefly on some principal types of reactors now under consideration in the United States. Our views are largely the result of work done by Nuclear Power Group. However, our conclusions at Commonwealth Edison are our own and may or may not be concurred in by representatives of other companies in our group. THE GAS-COOLED GRAPHITE-MODERATED REACTOR One study by Commonwealth Edison before the formation of Nucler Power Group covered the gas-cooled graphite-moderated reactor, the type adopted by the British. Gas is not inherently a good heat transfer agent and our con clusions were not favorable, largely because of the cost of pumping huge volumes of gas for cooling. I am told that the British choice was based in part on improved design but more importantly on the fact that the gas-cooled graphitemoderated reactor can be fueled by natural uranium without enrichment. The British do not have large-scale faciilties for the separation of U-235 from natural uranium. Nuclear Power Group has reviewed an up-to-date study by Babcock & Wilcox of the gas-cooled type of reactor. This indicates the possibility of greatly im proved economics through the suspension of graphite dust in the gas; also through the use of unclad ceramic fuel elements. These developments have not progressed to the point of indicating that serious consideration should be given at this time to the actual building of a full-scale facility. They do point to the desirability of further study which is being carried out by Nuclear Power Group and others. THE PRESSURIZED WATER REACTOR The pressurized water reactor has been a favorite in the United States. It has been demonstrated beyond any doubt that a pressurized water reactor can be built and operated very satisfactorily. It is our view, from the standpoint of economics, that this type of reactor is much superior to the gas-cooled graphitemoderated in its present stage of development. However, costs must be substantially reduced before the pressurized water reactor becomes competitive in the United States. Its prospects would improve if heavy water were to become sufficiently inexpensive to eliminate the need for fuel enrichment. The pres surized heavy water reactor would be especially attractive in foreign countries where U-235 for enrichment is not available. THE BOILING WATER REACTOR We adopted the Argonne Laboratory boiling water reactor principle because our studies indicated considerable superiority, from the point of view of economics, over any other type ready for early construction. We believe that the benefits such as higher steam pressures and savings in heat-exchanger costs will more than offset the effects of using radioactive steam in the turbine. |