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waste heat, the lease of a site for the power facility and the NPR during periods of power-only operations have been described to the committee during this hearing by representatives of BPA and AEC. It would therefore be repetitious to attempt further analysis.

The Supply System has recognized the need for BPA and AEC to obtain appropriate congressional clearance before entering into agreement and contracts for the financing, construction, and operation of NPR power facilities by the Supply System.

The Supply System has undertaken studies of the economic feasibility of undertaking this project under terms and conditions anticipated by the proposed contracts, and these studies have indicated that it would be to the benefit of the Supply System members and participating utilities to enter into such contracts. However, formal approval and consideration by the Supply System and utilities participating in the exchange arrangement now awaits congressional clearances necessary before AEC and BPA can enter into such agree-' ments.

In view of the many benefits to the region and Nation that will result from the proposed arrangement for utilizing the waste heat from the NPR to meet the power needs of the Pacific Northwest, we urge this committee to take appropriate action to bring about any required congressional authorizations.

SUMMARY OF PROVISIONS OF PROPOSED AEC-WPPSS CONTRACT

1. Land lease.--The Commission will make available certain land on which WPPSS will construct necessary facilities to permit generation of power. The terms and conditions of the land lease are set forth in a separate document which is an exhibit attached to the basic contract. Under the lease, WPPSS will be limited in its use of the land to the purposes set forth therein; namely, to construct and operate generating facilities. WPPSS will have rights of ingress and egress as well as certain easements for transmission lines and supporting structures. The Commission will have the right to terminate the lease with reasonable notice if the land is misused or disused, or if WPPSS becomes insolvent. If the lease is terminated prior to expiration, the Government may elect to acquire the facilities, in which case it will be required to assume the outstanding indebtedness of WPPSS. The Government will have an option to take title to the generating facilities, without cost, upon expiration of the lease. WPPSS will pay the Commission rent charges of $1,000 for the first year and $10 per year thereafter. The first year's charge is based on the cost of the survey of the land being leased. The expiration date of the lease will be the same as that of the contract. (See 12 below).

2. Construction of generating facilities.--WPPSS will construct, at its expense, the necessary generating facilities.

3. Modifications in NPR.--The Commission agrees to make certain modifications in the NPR which are requested by WPPSS and which are acceptable to the Commission, to be paid for by WPPSS, to improve the quality and dependability of the steam for the generation of electric power.

4. Delivery of steam energy.-Upon completion of the generating facilities and during periods when the Commission is operating the NPR, the Commission will, consistent with the safe, efficient, and effective operation of the NPR make available to WPPSS all steam steam energy in excess of the needs of the Commission produced incident to the operation of the NPR.

5. Commission review of designs, plans, and specifications relating to generating plant.—The Commission will have the right to review all designs, plans, and specifications relating to construction and modifications of the generating facilities and approve any features which the Commission determines could affect the safe and effective operation of the NPR or of other plants and facilities of the Commission.

6. Commission inspection rights.The Commission will have the right to inspect at all reasonable times the construction of the generating facilities and the operation of those facilities, during both the dual-purpose and power-only phases, to assure that the safety, efficiency, and effectiveness of the NPR and other Commission facilities are not impaired. The Commission will have comparable inspection rights concerning the NPR during the power-only phase. In addition, the Commission, as a consequence of inspection, during both the dualpurpose and power-only periods, may require WPPSS to undertake certain programs in order to assure the safety, efficiency and effectiveness of the NPR and other Commission plants and facilities.

7. Commission direction of operations during emergencies. During any period in which the Commission determines that an emergency exists relating to the safety and effectiveness of the NPR, the Commission may direct all actions and operations involving the generating facilities, and involving the NPR during periods when it is leased to WPPSS, until the emergency is terminated.

8. Transition to power-only operation.—At times when the Commission gives notice to WPPSS that dual-purpose operation is to be suspended, WPPSS will take necessary steps to satisfy any licensing requirements which may be a condition precedent to its operation of the NPR and will undertake any necessary modifications in the generating facilities necessary to accommodate power-only operation. The Commission at the same time agrees to undertake necessary modifications of the NPR which are acceptable to the Commission, to be paid for by WPPSS. The Commission will then tender to WPPSS the NPR under a lease agreement, attached as an exhibit to the basic contract. WPPSS will pay the Commission rent charges of $1,000 for the first year and $10 per year thereafter. The first year's charge is based on the cost of the survey of the land being leased.

9. Recapture of NPR by Commission. The Commission will have the right, at all times when the WPPSS is operating the NPR, to recapture the NPR for production or other purposes.

10. Compensation to Commission for costs of activities undertaken by Commission.—The Commission will be compensated for all costs associated with modifications of the NPR and construction and operation of the generating facilities in connection with this arrangement which the Commission would not have had if it had not entered into the arrangement. At no time will the Commission be required to expend its own funds. Those costs which result from activities which the Commission agrees to undertake shall be paid for from funds advanced to the Commission by WPPSS.

11. Charges for steam energy.-WPŘSS will pay to the Commission fixed charges for steam during all periods of dual-purpose operation. Fixed payments will be made irrespective of the quantity or quality of steam energy delivered or available, in accordance with the following schedule:

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12. Term and termination. The duration of the contract shall be from its execution until the revenue bonds issued by WPPSS have been paid or retired and shall continue thereafter so long as WPPSS continues to own and operate the generating facilities. The contract may be terminated by the Commission in the event the land lease or the NPR lease is terminated by the Commission.

13. Miscellaneous provisions. Certain additional miscellaneous provisions are also contained, such as the Commission's agreement to

(a) Make available without charge previously prepared studies, designs, plans, etc., which are necessary for the design, construction, and operation of the generating facilities.

(6) Provide certain supplies and services to the extent that the Commission determines that they are available.

(c) Conduct certain technical studies concerning the relationship of the NPR to the generating facilities and vice versa.

(d) To the extent and under the same terms and conditions that the Commission would provide comparable materials and services to other licensees, make available special nuclear material for fuel and perform fuel-cycle services for power-only operation.

OPERATING AND CONSTRUCTION CONTRACT NO. AT(45-1)-1355 BE

TWEEN THE UNITED STATES OF AMERICA REPRESENTED BY UNITED STATES ATOMIC ENERGY COMMISSION AND WASHINGTON PUBLIC POWER SUPPLY SYSTEM

JULY 6, 1962. This Operating and Construction Contract, entered into this.

--day of... 1962, between the United States of America (hereinafter called the “Government”), represented herein by the United States Atomic Energy Commission (hereinafter called the "Commission”), and the Washington Public Power Supply System (hereinafter called the “Supply System"), a municipal corporation, joint operating agency and publicly owned utility organized under the laws of the State of Washington.

RECITALS

(a) The Government, acting by and through the Commission, is presently constructing at its Hanford Works in the vicinity of RichTand, Washington, a new production reactor (hereinafter called the "NPR”) which will produce energy in the form of steam (hereinafter sometimes called "steam energy”) suitable for the generation of electric power.

(b) The Supply System is authorized by law to construct, acquire and operate works, plants and facilities for the generation of electric power. The Supply System proposes to construct an electric power generating plant in the immediate vicinity of the NPR and desires to purchase steam energy to be produced by the NPR to generate electric power in said plant.

(c) The Commission is authorized by the Atomic Energy Act of 1954, as amended, to sell to publicly, cooperatively or privately owned utilities or users, at reasonable and nondiscriminatory prices, energy produced by it incident to the operation of the Commission's production facilities.

(d) The Commission has agreed to enter into a lease agreement hereinafter called the "Land Lease") with the Supply System leasing to the Supply System land in the immediate vicinity of the NPR for the construction and operation by the Supply System of a generating plant. A copy of the land lease is attached hereto as Exhibit A. The Commission has also agreed to enter into a lease agreement (hereinafter called the "NPR Lease") with the Supply System in accordance with the provisions of Article 8(e) herein leasing to the Supply System the NPR. A copy of the NPR Lease is attached hereto as Exhibit B.

DEFINITIONS

As used in this contract:

(a) The term "Contracting Officer” means the person executing this contract on behalf of the Government and includes his successors or any duly authorized representative of any such person.

(b) The term "Commission" means the United States Atomic Energy Commission or any duly authorized representative or successor thereof, including the Contracting Officer except for the purpose of deciding an appeal under the article entitled “Disputes”.

(c) The term "Generating Plant” means an electric power generating plant having an ultimate capacity of approximately 860 gross megawatts which the Supply System will construct outside the NPR Security Area but in the immediate vicinity of the NPR and operate in conjunction therewith. “Related facilities” means the switching, transformation, transmission and other facilities outside the NPR Security Area associated with the Generating Plant.

(d) The term "Revenue Bonds” means the bonds issued by the Supply System in connection with the construction of the Generating Plant and related facilities, in accordance with the resolution or resolutions of the board of directors of the Supply System authorizing the issuance and sale of Revenue Bonds to pay the cost of such construction and for other purposes.

(e) The term "Dual Purpose Operation" means any period in which the NPR is being operated or maintained by the Commission for production or other Commission purposes incident to which operation is the production of steam energy and after the first unit of the Generating Plant has been certified as ready for normal continuous operation by the Construction Engineer designated in the bond resolution of the board of directors of the Supply System.

(f) The term "Power Only Operation” means any period in which the NPR is being operated or maintained by the Supply System or its agents for power production.

(g) The term “NPR Security Area” means an area comprising approximately forty acres to be enclosed with a chain link fence upon which will be located facilities for pumping water, water treatment, stand-by steam and electrical power, reactor emergency cooling, decontamination, and other plant facilities, in addition to the NPR and heat dissipation plants.

COVENANTS

1. Term of Contract

This contract shall be effective commencing at midnight on the date of its execution. It shall continue in effect until all Revenue Bonds have been paid or retired and shall thereafter continue in effect so long as the Supply System continues to own and operate the Generating Plant; Provided, however, that this contract may in any event be terminated by the Commission in accordance with Article 2 hereof. 2. Termination

This contract may be terminated by the Commission in the event the Land Lease or the NPR Lease is terminated by the Commission in accordance with its respective terms. The Commission shall give the Supply System written notice stating the Commission's intent to terminate this contract on a specified termination date, whereupon this contract shall terminate automatically on said date: In such event, the Commission shall give written notice as far in advance of the specified termination date as is reasonably practicable. 3. Design and Construction of Facilities by the Supply System

(a) As soon as is reasonably practicable the Supply System will complete the design and will construct the Generating Plant and related facilities. The Supply System will, unless delayed by causes beyond its control and not due to its own fault or negligence, complete the first and second generating units and have them ready for normal continuous operation not later than October 1, 1965 and December 1, 1965, respectively.

(b) The Commission will make available to the Supply System without charge previously prepared studies, designs, plans, specifications, and related material and information in their present state of completion which are necessary for the design, construction and operation of the Generating Plant and related facilities.

(c) The Supply System will submit all of its schedules, designs, plans, and specifications for the construction of the Generating Plant and related facilities to the Commission for approval by the Commission of any features thereof which the Commission determines could affect the safe and effective operation of the NPR or of other plants and facilities of the Commission at its Hanford Works. The Supply System will construct the Generating Plant and related facilities in strict conformance with the approved designs, plans and specifications.

86392—62—2

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