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conclusions must await completion of such studies which are now underway by Bonneville Power Administration.

(4) Specifically, the following steps need to be taken which will result in implementing the WPPSS proposal to a point where actual construction of the project can be undertaken to accomplish the objectives of the proposal.

(a) Obtain expressions of interest on the part of prospective participating Bonneville Power Administration utility customers.

(6) Clearance by committees of Congress of Bonneville Power Administration plans for implementing the WPPSS proposal.

(c) Satisfactory completion of negotiations between Bonneville Power Administration, WPPSS, and AEC for all arrangements required by the WPPSS proposal which will result in necessary contracts and agreements between all parties involved.

(d) The initiation and completion of engineering studies and designs required for preparation of specifications and invitations of bids on turbine-generator and heat exchangers.

(e) Call for and the conditional awarding of bids on major equipment (now expected to represent approximately 50 percent of the project direct construction cost).

6) Completion of economic and feasibility reports and preparation of an official statement for the revenue bonds.

Call for the awarding of bids on the sale of revenue bonds. (h) Call for and awarding of construction contracts and the scheduling of project completion.

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U.S. ATOMIC ENERGY COMMISSION,

Washington, D.C., April 6, 1962. Hon. CHET HOLIFIELD, Chairman, Joint Committee on Atomic Energy, Congress of the United States.

DEAR MR. HOLIFIELD: The Commission has completed its analysis of the proposal of the Washington Public Power Supply. System (WPPSS) to finance, design, construct, and operate electric power generating facilities at the Hanford new production reactor. A copy of the proposal 11 was provided to the Joint Committee with my letter of January 24, 1962.

The Commission has concluded that the proposal, as modified by the comments in our enclosed reply to the WPPSS, forms a satisfactory basis for negotiation of specific agreements. While the reply notes some aspects of the terms and conditions proposed by the WPPSS for its agreements with AEC which are not entirely acceptable in the form proposed and some which require further amplification, we are hopeful that we will be able to work out alternatives which will be acceptable to both AEC and WPPSS.

I was pleased to have had opportunity previously to discuss this matter with the committee and will endeavor to answer any further questions it may have. Sincerely yours,

GLENN T. SEABORG, Chairman. Attached: AEC letter of April 6, 1962, to WPPSS.

11 Printed on p. 101.

U.S. ATOMIC ENERGY COMMISSION,

Washington, D.C., April 6, 1962. Mr. OWEN W. HURD, Managing Director, Washington Public Power System, Kennewick, Wash.

DEAR MR. HURD: The Commission has completed its review of the proposal which you submitted to Mr. Luce and me on November 28, 1961, and amended by your letter of February 2, 1962, concerning conversion of AEC's new production reactor, now being constructed at Hanford, for electric power recovery. I am pleased to report that we consider your proposal, as modified by our comments below, to be a satisfactory basis for negotiation of appropriate agreements to accomplish the conversion project.

We have analyzed the preliminary statement attached to your letter, in particular the basic criteria and proposed terms and conditions relating to the proposed agreements between AEC and WPPSS, and would like to make certain observations concerning those parts of the preliminary statement which need to be modified in certain respects in order to establish a satisfactory basis for negotiation. The comments which follow are general in nature and are not

intended to express the full, detailed position of the Commission with respect to any particular aspect of the proposal.

LEASE OF LAND

The AEC is prepared to lease the necessary land upon which WPPSS would construct the generating plant and related facilities. In addition, the AEC would also make certain land or easements available for transmission lines to either WPPSS or BPA. We have not determined what the specific charges would be, but we will be prepared to discuss this point during negotiations.

GENERATING FACILITIES

The AEC would expect WPPSS to undertake the responsibility for designing and constructing the generating facilities. Subject to deletion of certain classified information not related to the proposed powerplant, we would make available, to the extent desired, plans, studies, designs, and related information at our disposal. We would plan to review and approve all features of the powerplant design and operations in order to assure that the facilities would be designed, built, and operated on a basis entirely compatible with safe and effective operation of the reactor.

ADDITIONS, MODIFICATIONS, OR REPLACEMENTS OF EQUIPMENT IN

REACTOR

With respect to any additions, modifications, or replacements in the NPR itself which may be desired by WPPSS in connection with the conversion project, AEC would expect to perform the necessary design and construction work itself with funds advanced by the WPPSS. The types of changes in the reactor which are contemplated are such as to make it essential that the AEC have complete control over the resulting equipment. Thus, the AEC should receive title to such equipment. AEC has no basis, however, for contributing to the financing of these modifications.

SUPPLY OF STEAM TO WPPSS BY AEC

The AEC is prepared to provide any excess steam produced during periods when the NPR is being operated by the AEC. With respect to the price at which such steam will be sold, AEC would have to arrive at a reasonable and nondiscriminatory price, as required by section 44 of the Atomic Energy Act of 1954, as amended. We believe that such a price would be based on the value of the steam for its intended use, giving appropriate recognition to the uncertainty in the duration of the dual-purpose period of operation. We will be prepared, of course, to discuss this matter during negotiations.

LEASE OF THE NPR TO WPPSS

During periods when NPR is not operated by AEC, we are prepared to lease it to the WPPSS under appropriate conditions. Among these conditions would be the right of the AEC to recapture the reactor at any time for its own purposes. Furthermore, we would expect the reactor to be operated and maintained in such a manner as to permit its continued and effective operation by AEC should the recapture clause be exercised. We will be prepared, during negotiations, to discuss appropriate charges for lease of the reactor.

LICENSES

While your letter of February 2, 1962, requested elimination at this time of your earlier request for assurances that all necessary licenses would be granted, the following information may be useful in your planning:

During the dual-purpose period, no AEC licenses would be required by WPPSS for operation of the generating facilities. The NPR would be operated by the AEC during the dual-purpose period only after a careful review of all aspects of its design, construction, and proposed program of operation resulted in a finding that it could be operated without constituting an undue risk to the public health and safety.

During any period of NPR operation by WPPSS or another nonAEC organization, the normal licensing procedures in effect at the time would be expected to be followed. While AEC cannot assure that all necessary licenses will be granted in the future, the Commission, prior to consummation of an agreement with WPPSS, will bave to determine whether on the basis of available information there is any reason to believe that the NPR could not be operated in the future as a licensed power reactor at the Hanford site without undue risk to the public health and safety.

SUPPLY OF FUEL

the During any periods that the WPPSS is operating the NPR, WPPSS would be expected to obtain nuclear fuel in the same manner as other non-Government operators of nuclear power reactors. The AEC is prepared to provide to WPPSS special nuclear material for

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fuel use and would perform fuel cycle services to the extent and under the same conditions that it would provide such materials and services to other licensees.

INDEMNITY AND INSURANCE

During the dual-purpose period, WPPSS will have the protection afforded to "persons indemnified” by the indemnity provision contained in the AEC contract with the operator of the reactor. This indemnity has been granted pursuant to section 170 of the Atomic Energy Act of 1954.

WPPSS would be responsible during both the dual-purpose and single-purpose periods for obtaining appropriate nonnuclear insurance.

During the single-purpose period of operation, when the reactor would be leased to WPPSS and operated under license, WPPSS would be subject to the same indemnity and insurance responsibilities as other licensees. In addition, during this period we would expect WPPSS to secure adequate property insurance on the reactor.

In connection with our review of your proposal, the Commission believes that no additional congressional authorization would be required for the Commission to negotiate and undertake appropriate agreements with WPPSS along the lines of your proposal, as modified by our comments above.

The modifications which we have proposed are based, to a considerable extent, on very fruitful preliminary discussions which have been held with you and your associates and with the Bonneville Power Administration. We have attempted, within the framework of our existing statutory authority and policies, to meet the general lines of your proposal.

We sincerely hope that you will be able to accept our comments, and that a satisfactory basis now exists to proceed with negotiations and development of appropriate agreements to implement this project. If

you have any question concerning any of our comments, I suggest that you communicate with Mr. Travis at Hanford, whom we have asked to conduct whatever negotiations are necessary. Sincerely yours,

GLENN T. SEA BORG,

Chairman.

WASHINGTON PUBLIC POWER SUPPLY SYSTEM,

February 2, 1962. BONNEVILLE POWER ADMINISTRATION, The Department of the Interior, Portland, Oreg. (Attention: Mr. Charles F. Luce, Administrator.) Dr. GLENN T. SEABORG, Chairman, Atomic Energy Commission, Washington, D.C.

DEAR MR. LUCE AND DR. SEABORG: Since submission of our “preliminary statement of basic criteria and proposed terms and conditions of agreement for WPPSS construction of NPR power facilities” with our letter to you dated November 28, 1961, it has been determined that paragraph 6 of the preliminary statement relating to licenses and permits, may be eliminated at this time and we, therefore, request that this be done.

Our thought on this topic is that provision with respect to any specific permit or license that may be required can be better formulated after further conferences with your staff and dealt with later by appropriate agreement or procedure. Very truly yours,

OWEN W. HURD, Managing Director.

U.S. ATOMIC ENERGY COMMISSION,

Washington, D.C., January 24, 1962. Hon. CHET HOLIFIELD, Chairman, Joint Committee on Atomic Energy, Congress of the United States.

DEAR MR. HOLIFIELD: Attached is a copy of a proposal by the Washington Public Power Supply System, submitted jointly to the Atomic Energy Commission and the Bonneville Power Administration, under which the supply system proposes to finance, construct, and operate electric power generating facilities utilizing steam produced in the Hanford NPR. The resulting electrical power would be sold to and marketed by the BPA. The Wasnington Public Power Supply System is an organization of 16 public atility districts of the State of Washington.

The supply system proposal has been under study by the AEC staff and informal discussions have been held by representatives of WPPSS, BPA, and AEC. From those meetings, we have learned that there is some flexibility in the WPPSS position regarding the terms and conditions necessary for them to undertake the project.

It is expected that the Commission will formally consider the WPPSS proposal in the very near future. We shall be pleased to keep the committee informed as to our conclusions and future progress on this matter. Sincerely yours,

GLENN T. SEABORG,

Chairman.

WASHINGTON PUBLIC POWER SUPPLY SYSTEM,

Kennewick, Wash., November 28, 1961. . Dr. GLENN T. SEABORG, Chairman, Atomic Energy Commission, Washington, D.C. Mr. CHARLES F. LUCE, Administrator, Bonneville Power Administration, The Department of Interior, Portland, Oreg.

DEAR DR. SEABORG AND Mr. LUCE: By our letters to Mr. Luce and Mr. J. E. Travis dated November 9, 1961, and copies of a resolution adopted by the Washington Public Power Supply System (WPPSS)) on October 20, 1961, we have indicated the concurrence of WPPSS in the action of Mr. Earl Coe, director of the Washington State Department of Conservation initiating consideration of the non-Federal financing of electric power facilities to utilize heat from the Hanford new production reactor (NPR) as set forth in Mr. Coe's letters to Dr. Seaborg dated October 27 and November 22, 1961. For your reference copies of these letters are attached.

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