(14) 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. (b) Provide certain supplies and services to the extent that the Commission determines that they are available, at the expense of WPPSS. (c) Conduct certain technical studies concerning the relationship of the NPR to the generating facilities and vice versa, at the expense of WPPSS. (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. (e) The contract has other provisions relating to Government property, patents, security, availability of information and reports, and various standard clauses required in all contracts to which an agency of the United States is a party. JULY 12, 1962. PROGRAM JUSTIFICATION DATA-ARRANGEMENT No. 63-1000, PHASE II A. NAMES OF CONTRACTORS Trilateral contracts among the Bonneville Power Administration (BPA), the Washington Public Power Supply System (WPPSS), and individual participants (currently public utility districts in the State of Washington but may include other publicly or privately owned utilities in Bonneville marketing area). B. DESCRIPTION OF PROPOSED ARRANGEMENT 1. Objective. The objective of this proposed arrangement is to make it feasible for WPPSS to purchase and pay for the byproduct NPR steam. The arrangement would also assist BPA to firm up and thereby make salable large quantities of surplus peaking capacity and secondary electric energy which otherwise would be wasted to meet a need for additional firm power to supply publicly and privately owned public utilities, cooperatives and industries in the Pacific Northwest. The mutual exchange of power would also result in more economical operation of the Columbia River power system. C. GENERAL FEATURES OF PROPOSED ARRANGEMENT 1. Financing construction and operation of the works, plants, and facilities for generation and transmission of power and energy project.-The supply system will issue revenue bonds pursuant to the bond resolution of the supply system to obtain the funds to build the project. It will sell the output of the plant, delivered at Vantage, Wash., to the participating utilities, which may include publicly and privately owned utilities, but all are initially customers of Bonneville Power Administration. Each participating utility will purchase a fractional share of the Hanford output for which it will agree to pay the same fractional share of the total annual costs of the project, including bond amortization. 2. Term. Commencing at 12 p.m. on the date of execution and ending when the revenue bonds are paid, continuing thereafter until notice of termination is given by the Administrator. There is an additional termination provision for the period prior to the commencement of commercial operation of the project if, during such period, the AEC discontinues construction of NPR, or the continuation of the agreement becomes economically unjustified. In the event of such termination, the Government will reimburse the Supply System for costs incurred up to the date of termination. (These provisions principally relate to the contingency of our international agreement affecting the project.) 3. Construction of the project. The Supply System will construct the project and the transmission facilities required to connect into the Bonneville system at Vantage, Wash. 4. Exchange of energy and payment of project annual costs.-The participating utilities, as a group, will jointly deliver into the BPA system at Vantage their respective shares of the output of the NPR generation. In exchange, Bonneville will make energy and capacity available to each participating utility at its load centers, under the terms of its power sales contract with BPA. The amount of power which BPA will make available to such utilities will be an amount equal in value, under the current BPA rate, to the utilities' share of the annual costs of the Hanford project. After the end of each contract year the actual costs will be determined and an appropriate adjustment in energy will be made under the remaining months of the current contract year, if such actual costs differ from the estimated costs. If any participant should no longer have a power sales contract with BPA, the Government will make available exchange electric energy in an amount which is equal to the quotient obtained by dividing his monthly share of the project annual costs by the average cost per kilowatt-hour for firm power under the prevailing rates to other participants of the same class who are customers of the Government. The rate of delivery of such energy will be determined by dividing such energy in average kilowatts by 60 percent. 5. Scheduling arrangements. The operation of the project will be scheduled by the Government dispatcher. 6. Operation and maintenance of the project.-The Supply System will operate and maintain the project. Planned outages will take place, if possible, when the Government's commitments are least affected. 7. Ownership of facilities and option to acquire.-Ownership of the project during the term of agreement will be in the Supply System. The Government may acquire the project (1) prior to the time when all bonds and other obligations have been paid by assuming the outstanding balance of such obligations or (2) upon the termination of the agreement. In either event, prior congressional authorization would be required. 8. The Supply System-AEC Agreement.-The Supply System and the AEC will have entered into an agreement for construction and operation of the project. The AEC agreement, to which the Supply System obligates itself, will be attached to the agreement. 9. Accounts.-The Supply System will keep accurate records and accounts for the project which will be annually audited by a firm of certified public accountants. A copy of this audit will be furnished the BPA. 10. Other provisions.-The contract has other provisions relating to insurance, maintenance of reserve funds, waivers of default, notices, assignment, arbitration, rates, and various standard clauses required in all contracts to which an agency of the United States is a party. U.S. ATOMIC ENERGY COMMISSION, Hon. CHET HOLIFIELD, DEAR MR. HOLIFIELD: In the course of the Joint Committee's consideration of the proposed arrangements between the Atomic Energy Commission, the Bonneville Power Administration and the Washington Public Power Supply System (WPPSS), for construction by the WPPSS of electric-generating facilities to utilize steam from the new production reactor (NPR), the AEC was requested to submit a statement as to our degree of confidence in the performance of the reactor. The purpose of this letter is to provide such a statement together with some related explanatory material. As you are aware, responsibility for the scoping, development work, and design for the NPR was assigned to the General Electric Co. In carrying out this responsibility, GE has utilized the technical and design staff at Hanford as well as other appropriate offsite groups in its organization. In addition, it has had extensive assistance from the architect-engineer for the heat dissipation system of the reactor, Burns & Roe, Inc. Considering these arrangements and GE's extensive experience in reactor construction and operation, the AEC has confidence in GE's judgment as to the expected performance of the NPR. In a recent letter to our Hanford Operations Office, GE stated that it has a high level of confidence that the NPR plant will operate safely and effectively as designed and will produce the steam needed for the generation of 800,000 kilowatts of electrical power. GE's confidence in the NPR design and in the ability of the plant to operate safely as designed has been strengthened as more and more design and development problems have been solved. Regarding such problems, GE representatives, in testimony before the committee in 1961, pointed out that the major development problems remaining at that time were associated with efficiency rather than with feasibility of operation. In the year since then, encouraging progress has been made in development and test work. It should be pointed out, however, that there will have to be a period of testing and adjustment following reactor startup before design power levels can be met. This has been recognized in connec tion with the WPPSS proposal, and because of the importance of timing to the WPPSS, we have asked GE to define the schedule on which the powerplant operation could commence. They have advised that 1 year after fuel loading, scheduled for the fall of 1963, sufficient steam will be available for the operation of one turbine generator unit at 400,000 kilowatts. Nine months later, or 21 months after fuel loading, sufficient steam will be available for the operation of two 400,000-kilowatt-turbine-generator units. This schedule is compatible with the WPPSS schedule for firm operation of the first turbine generator unit by October 1965 and firm operation of both turbinegenerator units by December 1965. The period of reactor startup and much of the climb to power would occur when the WPPSS powerplant would be under construction. By the time powerplant operation could begin, most of the causes of unscheduled reactor interruptions, such as instrument malfunctions and piping leaks, should have been corrected and necessary modifications accomplished. Therefore, when NPR steam would be needed for power generation, it should be available in adequate quantity, and with the anticipated degree of reliability. On the basis of all available current information, we concur in GE's opinion that there is a high level of confidence that the reactor will perform in accordance with its design criteria. Sincerely yours, A. R. LUEDECKE, General Manager. U.S. ATOMIC ENERGY COMMISSION, Hon. CHET HOLIFIELD, Chairman, Joint Committee on Atomic Energy, DEAR MR. HOLIFIELD: I am advised that, in connection with a possible amendment to the AEC authorization bill for fiscal year 1963 that would authorize the Commission to enter into the proposed arrangements with Washington Public Power Supply System for the sale and utilization of excess steam from the new production reactor, it has been suggested that the authorization include a proviso to the effect that the Commission would be precluded from entering into a contra ct with Washington Public Power Supply System until the Commission had determined that WPPSS had offered to privately owned organizations on a nondiscriminatory basis a 50-percent participation in the proposed arrangements for disposition and distribution of electric power among Washington Public Power Supply System, Bonneville Power Administration, and the participating utilities. The Commission would have no objection to the inclusion of such a proviso in any legislation that may be enacted for the purpose of authorizing the Commission to enter into the proposed arrangements. Sincerely yours, GLENN T. SEABORG, Chairman. WASHINGTON PUBLIC POWER SUPPLY SYSTEM, Hon. CHET HOLIFIELD, Kennewick, Wash., July 12, 1962. Chairman, Joint Committee on Atomic Energy, U.S. Capitol, Washington 25, D.C. DEAR MR. CHAIRMAN: Yesterday, during the concluding period of the hearing by your committee on the WPPSS Hanford power facility contractual arrangements, you requested that I report to you before 4 p.m. today on the following: 1. Results of a telephone survey of members of the board of directors of WPPSS as to their reaction to a proposal that 50 percent of the project output be made available to private utilities either by statute or as WPPSS policy. 2. Results of a similar inquiry to Northwest private utilities as to their interest in participating in the proposed exchange arrangements on the basis of (a) a statute that would specify that 50 percent of the project output be made available to the private utilities or (b) on the basis of a WPPSS policy which would reserve the same amount to them. It was recognized that a time limit for any such reservation would be applicable in order to finance the project as presently anticipated. 3. Make inquiry of our counsel as to any adverse legal problems which might be created by such a reservation. With respect to the reaction of the WPPSS board members, 8 of the 16 members were consulted. The consensus was that since WPPSS had already made every reasonable and timely effort to invite participation by the private utilities, and since this invitation had met with only minor expressions of interest from such utilities, it would appear to be inappropriate to now endorse a proposal to make mandatory a reservation of 50 percent of the project output to the private utilities. With respect to the inquiry of the private utilities with regard to this matter, I sent the attached copy of a telegram to the six private utility companies in the Pacific Northwest as indicated. As of the writing of this letter I have not received any response to the telegram. In addition, I contacted by telephone Mr. Hugh Smith, attorney for the Pacific Northwest Power Co. in Portland, Oreg., and supplemented information contained in the telegram. He advised me that he would contact his clients regarding this matter. Our attorneys have advised me that they now foresee no adverse legal effects were such a reservation to the private utilities established either by statute or policy. It is my opinion that although members of the WPPSS board have expressed disfavor of the 50-percent reservation proposal, if such a provision were made a part of any authorizing statute or condition they would, as they have up to this time, continue in their efforts to bring about the use of the NPR waste heat for the maximum benefit of the region and Nation. Very truly yours, OWEN W. HURD, Managing Director. |