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WASHINGTON PUBLIC POWER SUPPLY SYSTEM,

Kennewick, Wash., November 9, 1961. . Mr. J. E. TRAVIS, Manager, Hanford Operations Office, Atomic Energy Commission, Richland, Wash.

DEAR MR. TRAVIS: As you know, the Washington Public Power Supply System has had a continuing interest in the proposals for the additon of electric power facilities to the NPR to utilize the waste heat during the period of plutonium production and for power purposes only thereafter. The WPPSS Executive Committee, at a meeting on October 20, 1961, adopted the enclosed resolution endorsing the action of the director of the Washington State Department of Conservation for initiating consideration by BPA and AEC of ways and means for non-Federal participation in the financing of the NPR power features and to assist in bringing about an early decision as to the desirability of non-Federal participation in the financing of the NPR power features and, if determined to be economically feasible, to serve as the non-Federal entity for this purpose.

It is the purpose of this letter to advise you of the action taken and to express our desire and interest to cooperate in every way possible to bring about early decisions on matters pertaining to the arrangements necessary between BPA-AEC-WPPSS for the nonFederal financing, construction and operation of the NPR power production facilities and, if economically feasible to serve as the nonFederal entity for this purpose.

We are aware of Mr. Coe's letter of October 27, 1961, to Mr. Seaborg relative to problems related to non-Federal financing of the NPR power features and concur with the viewpoints expressed as well as recognize the importance of obtaining answers to the specific questions raised in his letter. At an appropriate time, we will appreciate the opportunity to participate in discussions with your staff regarding the specific steps that need to be taken to consummate the necessary arrangements with AEC, BPA, and WPPSS for the non-Federal financing of the NPR power features. Very truly yours,

OWEN W. HURD, Managing Director.

WASHINGTON PUBLIC POWER SUPPLY SYSTEM EXECUTIVE COMMITTEE

RESOLUTION 12

A resolution relating to investigation of non-Federal participation in

Hanford NPR power facilities adopted by WPPSS Executive Committee, regular monthly meeting, October 20, 1961, Wenatchee, Wash.

Whereas Congress has rejected proposed plans and appropriations for the addition of power facilities to the Hanford new plutonium production reactor (NPR) now under construction making it desirable to consider ways and means for financing of said power facilities; and

Whereas WPPSS has recognized the need for supplementing Northwest hydro resources with thermal power including the utilization of Cle Elum coal deposits when economically feasible; and

Whereas WPPSS has had a continuing interest in the economic utilization of the waste heat from the Hanford NPR by conversions to electric power and its integration with power produced at Northwest hydro projects and marketed by the Bonneville Power Administration; and

Whereas the economic utilization of waste heat at the NPR during the period of expected plutonium production and the use of the facilities thereafter for power production purposes would aid in meeting expected Northwest power shortages beginning 1964-65 and make available power for Northwest industrial expansion as well as benefit to the Nation otherwise: Now, therefore, be it

Resolved, That WPPSS commend Earl Coe, director of the Washington Department of Conservation in the actions he has taken in initiating consideration by BPA and AEC of ways and means for non-Federal participation in the financing of the NPR power feature, and continuing studies of the economic utilization of Cle Elum coal as a source of low-cost power; and be it further

Resolved, That the managing director is instructed to advise the department of conservation, BPA, and AEC of its desire to aid and assist in bringing about an early decision as to the desirability of nonFederal participation in the financing of the NPR power features and if determined to be economically feasible to serve as the nonFederal entity for this purpose.

DEPARTMENT OF CONSERVATION,

Olympia, October 27, 1961. GLENN T. SEABORG, Chairman, Atomic Energy Commission, Washington, D.C.

DEAR SIR: The recent congressional action refusing appropriations for the construction of electrical generating facilities at the new production reactor now under construction at Hanford, Wash., suggests the possibility of the State of Washington undertaking construction of the generating facilities.

The authority of the State of Washington to construct such a project through the Office of the Director of Conservation of the State of Washington has been preliminarily analyzed in the enclosed memorandum dated October 4, 1961, prepared by the Office of the Attorney General of the State of Washington.

As you are aware, the economic feasibility of the project probably cannot be demonstrated if the project is delayed much longer. Thus, the economics of the electrical generating facility at Hanford are directly related to

The period of operation of the new production reactor during which steam would be available as a byproduct.

The earliest possible release of energy reserves held by the Bonneville Power Administration in anticipation of 1965–66 power requirements. (Release of this energy reserve can be accomplished only if alternative energy becomes available.)

We believe that the participation of the State of Washington in this project along the lines indicated in the enclosed memorandum may provide the means for avoiding delays which could be fatal to the project.

We wish to emphasize that we do not offer the proposed course of action as a substitute for Federal construction of the facility. Our proposal is, rather, an alternative to Federal construction if, and only if, it becomes apparent that the congressional approval of Federal construction with appropriations cannot be obtained to assure construction within the time in which economic feasibility can be demonstrated.

The State of Washington has consistently and energetically supported Federal authorization and construction of the generating facilities at Hanford. The State is still of the opinion that Federal construction, if commenced in 1962, would be the most desirable approach.

In the event that Federal construction is found to be improbable and State participation is found to be prima facie acceptable, a number of problems must be resolved.

We have had the pleasure of the cooperation of personnel at Hanford and representatives of the Bonneville Power Administration. In our discussions, a few of the problems with which we would be faced in the event the State participation were defined. However, it will be necessary for us to further explore, in concert with the Bonneville Power Administration, Department of Interior and congressional committee staffs, such problems as

(1) Considerations involved in "leasing” the site of construction with the view of meeting requirements of revenue bond financing.

(2) The period of time in which the Commission can agree to provide steam energy as a byproduct to the primary purpose of the NPR.

(3) In the event of termination or curtailment of plutonium production for military purposes, the terms and conditions for operation of the reactor for steam generation only for the State of Washington would require definition and mutual agreement

with the view of satisfying necessary covenants of revenue bonds. We realize that many additional problems must be defined, analyzed, and provided for before the final analysis of the feasibility of participation by the State of Washington can be determined. We also realize that additional conferences with your staff will be necessary. However, we are confident that these problems, as complicated as they may be from a legal viewpoint, can be resolved.

We hope and believe that our offices and other agencies of the State of Washington will prove to be the catalyst which will enable construction of this important facility with its resultant contribution to the technology and economic strength of our Nation. Accordingly, it is hereby requested that we be favored with your general observations concerning the foregoing and such other problems that you foresee under the plan of participation discussed above. Very truly yours,

EARL COE, Director, Department of Conservation.

STATE OF WASHINGTON,
DEPARTMENT OF CONSERVATION AND DEVELOPMENT,

Olympia, November 22, 1961.
GLENN T. SEABORG,
Chairman, Atomic Energy Commission,
Washington, D.C.

DEAR SIR: Since we submitted our letter of October 27 relative to construction of the generating facilities at the Hanford new production reactor by the State of Washington, and your acknowledgment of November 13, the Washington Public Power Supply System, a municipal corporation of the State of Washington consisting of 16 public utility districts, has declared its desire to construct the facilities and is submitting to you an outline of its proposal for undertaking the project.

We request that you defer action on our letter of October 27, and, instead, respond first to the specific proposal submitted by WÞPSS. However, we request that the State of Washington be included, in any future discussions for the construction of the facilities by WPPSS, so that in the event WPPSS is unable, for some unforseen reason, to undertake the project, the State will be in a position to proceed with the project as a State-owned facility. We appreciate the cooperation you and your staff have given us. Sincerely yours,

EARL CoE, Director.

U.S. ATOMIC ENERGY COMMISSION,

Washington, D.C., July 11, 1962. Hon. CHET HOLIFIELD, Chairman, Joint Committee on Atomic Energy.

DEAR MR. HOLIFIELD: At the hearings conducted by the Joint Committee on Atomic Energy on July 11, 1962, you requested that we advise the committee as to any effect the preference provisions of the Atomic Energy Act might have upon a proposal made by Senator Jackson with respect to the proposed arrangement with Washington Public Power Supply System. Senator Jackson's suggestion was that any legislation specifically authorizing the Commission to enter into the proposed WPPSS contract should include a provision that not less than one-half of the electric power to be produced in the generating facilities to be constructed by WPPSS shall be offered to nonpreference utilities.

The preference provisions of the Atomic Energy Act with respect to disposition of energy are contained in section 44. This section provides that, in contracting for the disposal of energy produced at production facilities of the Commissionthe Commission shall give preference and priority to public bodies and cooperatives or to privately owned utilities providing electric utility services to high cost areas not being served by public bodies or cooperatives.

In my opinion, the sale of steam energy to Washington Public Power Supply System, a municipal corporation and publicly owned utility established under the laws of the State of Washington, as provided in the proposed contract between the Commission and the WPPSS, would satisfy the preference requirements of the Atomic Energy Act. If the Congress should enact authorizing legislation including the proviso proposed by Senator Jackson, there would be no legal impediment to the inclusion in our contract with WPPSS of provisions that would impose on WPPSS the obligation to further dispose of electric power in accordance with the statutory restrictions. Sincerely yours,

JOSEPH F. HENNESSEY,

Acting General Counsel.

DEPARTMENT OF THE INTERIOR,
BONNEVILLE POWER ADMINISTRATION,

OFFICE OF THE ADMINISTRATOR,

Portland, Oreg., July 12, 1962. Hon. CHET HOLIFIELD, Chairman, Joint Committee on Atomic Energy, House of Representatives, Washington, D.C.

DEAR MR. HOLIFIELD: Enclosed is a legal opinion of the Associate Solicitor for Water and Power, Department of the Interior, regarding the inapplicability of the pullback provision of the Bonneville Project Act to exchange agreements with privately owned utilities. This is in response to your request made at the hearing on the Hanford project on July 11, 1962. Sincerely yours,

CHARLES F. LUCE, Administrator.

DEPARTMENT OF THE INTERIOR,

OFFICE OF THE SOLICITOR,

Washington, D.C., July 12, 1962. Memorandum to: Administrator, Bonneville Power Administration,

Portland. From: Associate Solicitor, Water and Power. Subject: Exchange contracts with private utilities under section 5(b)

of the Bonneville Power Act. The provisions of the Bonneville Act with respect to pullback of power from private utilities on 5 years' notice if power is needed by preference customers and relative to a maximum contract term of 20 years relate only to contracts for the sale of power under section 5(a) of the Bonneville Project Act. Neither of these provisions is applicable to a contract for the exchange of power under section 5(b) of the Bonneville Project Act.

A private utility becoming a participant in the plan proposed by the Washington Public Power Supply System, thereby purchasing a percentage of the output of the generating facilities to be installed in connection with the Hanford reactor in the same manner as the proposed public agency participants, could enter into an agreement with the Bonneville Power Administration to exchange the private utility's portion of the Hanford generation for Bonneville Power Administration generation to be delivered at a time usable in the utility load curve. The exchange under these circumstances could result in a long-term power supply being made available to the participating private utility by means of its purchasing a share of the output of the

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