Hanford facilities and exchanging it for Federal power under section 5(b) of the Bonneville Project Act. The pullback provisions would not be applicable to such long-term power supply. EDWARD WEINBERG, Associate Solicitor, Water and Power. Copy to regional solicitor, Portland, Washington office, Bonneville Power Administration. Hon. CHET HOLIFIELD, DEPARTMENT OF THE INTERIOR, OFFICE OF THE SECRETARY, DEAR MR. HOLIFIELD: You have requested that we report on the progress of our negotiations with locally owned utilities for the nonFederal financing, construction, and operation of electric generating facilities at the Hanford NPR. We are happy to report the conclusion of such negotiations. The Washington Public Power Supply System is prepared to finance, install, and operate such facilities at Hanford. The supply system is a municipal corporation in the State of Washington composed of 16 public utility districts, all of whom are customers of the Bonneville Power Administration. In the aggregate, they presently purchase more than 1 million kilowatts of power from Bonneville each year. The Atomic Energy Commission, which is a necessary party to any contractual arrangements for the addition of generating facilities at Hanford, reports that it, too, has completed negotiations with the Washington Public Power Supply System. The proposed addition of two 400,000-kilovolt turbines and generators to NPR will provide important benefits to the Nation without the expenditure of tax receipts: 1. The tremendous quantity of byproduct steam incidental to the manufacture of plutonium in the NPR will be used and not wasted. 2. The Federal Treasury will be given an opportunity to recoup the $25 million that has been spent in making NPR convertible for the dual purpose of producing electricity. The supply system proposes to pay for the otherwise waste steam on a schedule which will total $31 million if the reactor is used for the dual purpose of manufacturing plutonium and electricity for only 10 years, and $64,500,000 if the period is 15 years. If the reactor is used for these purposes as long as 24 years, the supply system will pay the Atomic Energy Commission $125 million for the otherwise waste steam. 3. There will be added to the Pacific Northwest Power Pool more than 800,000 kilowatts of firm power at a cost, including the payments for byproduct steam, comparable to the costs of alternative new sources of electricity in that region. 4. Important fish conservation goals will be served because this project, unlike some hydro projects, has no fish problems. Any effect of Hanford on the fishery resource would be beneficial. For this reason, commercial and sport fishing groups in the Pacific The Bonneville Power Administration has had an independent review made of the technical feasibility of this project, and is convinced of both the technical and economic desirability of the project. The supply system plans to spend approximately $6 million in research to improve the efficiency of the power-only fuel formula, research that may well advance the science of nuclear-power production. The bases of the particular agreements between the Bonneville Power Administration, the Washington Public Power Supply System, the Atomic Energy Commission, and the participating utilities are described in the project justification data, arrangement No. 63-1000 phase I and phase II, which has been presented to your committee by the Atomic Energy Commission. The Solicitor's Office of the Department of the Interior has reviewed the proposed agreement that Bonneville Power Administration prepared to enter into and finds it clearly within the authority of the Bonneville Project Act. For the protection of the Government, the proposed contracts give the United States an option to acquire the Hanford generating facilities at any time for a price equal to the unamortized balance then owing on the supply system's revenue bonds. This option, however, could not be exercised unless Congress first approved the acquisition. We appreciate your continued interest in the construction of this dual-purpose reactor at the Hanford Atomic Energy Works in Richland, Wash. We know you share our concern that a resource so vital to the Nation should not be wasted. The construction of this first dual-purpose reactor in the United States will be of inestimable value in reaffirming the goal of this country to utilize nuclear energy for peaceful purposes. We can assure you that the Department of the Interior wholeheartedly endorse this project and the above arrangements for its construction. Sincerely yours, STEWART L. UDALL, U.S. ATOMIC ENERGY COMMISSION, Hon. CHET HOLIFIELD, Chairman, Joint Committee on Atomic Energy, DEAR MR. HOLIFIELD: I am enclosing program justification data No. 63-1000 which has been developed cooperatively by our staffs in connection with a possible amendment to the Atomic Energy Commission's authorization bill for fiscal year 1963. The amendment would have the purpose of authorizing the proposed arrangements among Washington Public Power Supply System, Bonneville Power Administration, and the Atomic Energy Commission for the disposal of byproduct steam from the new production reactor and the generation and distribution of the electric power to be generated through utilization of the byproduct steam. The program justification data properly describes the general objectives of the proposed arrangements and correctly summarizes the major contractual terms and conditions that have been agreed upon by the parties. The Commission believes that the proposed arrangements would be advantageous to the Commission in that (1) the Commission would receive substantial revenues from the disposal of byproduct steam that would otherwise be wasted, (2) the demonstration of feasibility of producing a very large amount of electric power from nuclear energy in a dual-purpose reactor would contribute to the advancement of the utilization of atomic energy for industrial purposes, and (3) it would make possible a more rapid resumption of the production of plutonium for national defense purposes in the event that plutonium production were suspended. The Commission would support the enactment of legislation that may be proposed for the purpose of providing specific congressional authorization for these arrangements. Sincerely yours, GLENN T. SEABORG, Chairman. PROJECT JUSTIFICATION DATA-ARRANGEMENT No. 63-1000, PHASE I A. PARTIES The Atomic Energy Commission and the Washington Public Power Supply System (WPPSS), Kennewick, Wash., a municipal corporation, joint operating agency and publicly owned utility organized under the laws of the State of Washington, and composed of 16 public utility districts. B. DESCRIPTION OF PROPOSED ARRANGEMENT (1) Objective. The objective of this proposed arrangement is to sell to WPPSS excess steam energy produced in the course of operating the NPR, for the production, in generating facilities constructed and operated by WPPSS, of large quantities of power, 800,000 kilowatts rated capacity. The Commission, through the sales of such excess steam energy, would recover appreciable sums of money, thus reducing the cost of plutonium to be produced in the NPR. Furthermore, programatic objectives of the Commission would be accomplished through contribution to the Nation's nuclear power development program. The arrangements for distributing the power generated by WPPSS are outlined in phase II. During periods when the Commission is not operating the NPR for its own purposes, the NPR would be leased to WPPSS to permit its continued operation for steam production. Such a lease arrangement would assist in shortening the period required to resume production activities and lower standby costs should national defense interests require such resumption. (2) Location.-Hanford, Wash. C. GENERAL FEATURES OF PROPOSED ARRANGEMENT (1) Land lease. The Commission will make available approximately 13 acres of land on which WPPSS will construct necessary facilities to permit generation of power. 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 under the bonds issued for this project. 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 expiration date of the lease will be the same as that of the contract. (See 13 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 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 is 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 dual-purpose 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. 86392-62 -9 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 NPŘ under a lease agreement described in paragraph (9) below. (9) NPR lease.-Under the terms of the lease, WPPSS will be required to use the NPR solely for the production of steam energy to operate the generating facilities. WPPSS will comply with the provisions of the basic contract pertaining to use, maintenance and operation of the NPR. The Commission will have the right to terminate the lease if the NPR is not used in the manner provided for in the lease and in the basic contract. WPPSS will pay the Commission rent charges of $1,000 for the first year and $10 per year thereafter. The expiration date of the lease will be the same as that of the contract. (See (13) below). (10) 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. (11) 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. (12) Charges for steam energy.—WPPSS 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: (13) 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. |