servation, the Washington Public Power Supply System made a proposal along these lines to AEC and BPA; this will be considered in some detail herein. The exploration of the project by WPPSS has now reached a point where a progress report should be made. Also, it is necessary to obtain an expression of interest from those utilities desiring to participate in the arrangements required. PURPOSE AND SCOPE OF STATEMENT We shall set forth herein a concise summary of pertinent information necessary for an understanding of the WPPSS proposal and proposed means for the accomplishment of its objectives. It should be understood that although the results of the exploratory investigations and studies thus far are encouraging, there remains much still to be done including further confirmation of feasibility, finalizing of contractual arrangements, satisfactory negotiations on certain items of cost and other matters. THE HANFORD PROJECT The Hanford project came into being early in the Second World War for the purpose of producing fissionable plutonium from uranium for military weapon requirements. The large atomic reactors developed and constructed for this purpose have become known as the "Hanford" type. These reactors are graphite moderated with horizontal pressure tubes containing the uranium fuel elements. The tubes are cooled by large quantities of water obtained from and returned to the Columbia River. Eight reactors of this type have been constructed and operated at the Hanford project. BACKGROUND ON THE NPR As a result of concern over the adequacy of the production of nuclear reactor products to meet military requirements, the Joint Committee on Atomic Energy in 1957 recommended the construction of an additional plutonium production reactor of advanced design. Congress in the same year appropriated $3 million with authorization for AEC to proceed with design, development, and engineering work necessary for the construction of a new production reactor (NPR). AEC selected for study a reactor design of the Hanford type and plant designs which would only produce plutonium, as well as designs which would also produce varying amounts of byproduct electrical energy with the waste heat from the reactor. A report by AEC was submitted to the Joint Atomic Energy Committee and extensive hearings held in 1958. The type of reactor recommended by the Joint Committee and subsequently approved by the Congress was a convertible type with features permitting its use either for the production of plutonium only or with the addition of external electrical generating facilities for the production of both plutonium and electrical energy. In August 1958, project 59-a-5, "Plutonium reactor facility for special nuclear materials, convertible type, Hanford, Wash." and an appropriation of $145 million was authorized. The authorization (H.R. 13121) provided that certain "convertibility features" be embodied in the reactor plant and its heat-dissipating system to provide for the production of byproduct electric power at a future date by the addition of the turbine-generator plant. The initial authorization by Congress did not include facilities for generating electric power, rather it provided that the plant was to be "convertible" to dual-purpose (plutonium and power) or power-only operation. AEC assigned the reactor design responsibility to the General Electric Co., present contractor-operator of existing reactors at Hanford, to Burns & Roe, Inc., the design of the heat dissipation system and auxiliary facilities, and to Kaiser engineers the prime construction contract. The reactor complex, which is now under construction, is designed to be operated for three functions: (1) production of weapons-grade plutonium only; (2) production of weapons-grade plutonium as the primary function with the production of byproduct electric power through the use of the recoverable waste heat; and (3) the production of electric power only. When the present construction is completed, now scheduled for October 1963, the NPR will be operated only for the purpose of producing weapons-grade plutonium. At the present time, the NPR reactor complex is approximately 46 percent complete. The assembly of the graphite moderator core was completed in February 1962, and construction of the other reactor and heat-dissipation equipment is proceeding at a rapid pace. The installation of the electric generating and associated facilities to produce electric power, either under dual-purpose or power-only operation, has been proposed by WPPSS. During the plutonium-only period, most of the steam formed in reactor will be carried to dump condensers and thence to the Columbia River. During the dualpurpose and power-only periods, all or part of the steam will be piped to the turbogenerators for power production. The temperatures and pressures of the primary coolant water will be sufficiently high to permit the production of steam, in a secondary system, suitable for use in turbine generators. The design of the heat-dissipation system provides for the later installation of turbogenerators and the necessary auxiliary facilities to actually recover power. Since authorization of the convertible NPR, a number of studies of the economic feasibility of generating byproduct electrical energy with the NPR have been made, including the following: AEC April 1958 study; Stone and Webster, December 1958 study; Federal Power Commission, February 1960 study; R. W. Beck, March 1960 study; Federal Power Commission, February 1961 study; and Optimization studies of reactor design completed subsequent to the foregoing studies indicate that 800 megawatts electric during the dual-purpose period and 860 megawatts electric during the poweronly period are possible. Detailed economic studies demonstrate that the 800/860 megawatts electric plant represents the most economical and favorable installation. The Burns & Roe, Inc., studies, prepared for the AEC, developed detailed cost estimates of the electric power generating facilities. These studies were reviewed and updated by Burns & Roe, Inc., in February 1962, to reflect current price levels. At the time the original estimates were prepared for AEC in 1961, Burns & Roe, Inc., carried on detailed discussions with several turbine equipment manufacturers to clearly establish the engineering feasibility of constructing individual units of the size contemplated and under the steam pressures and conditions which will be available both during the dual-purpose and the power-only periods. At least three domestic manufacturers and one foreign manufacturer have demonstrated that they can manufacture the equipment. Detailed specifications for the turbine-generator units are now complete in draft form and can be completed ready for bidding in 30 to 60 days. Delivery time on this equipment is the factor controlling project completion. Design, fabrication, erection, installation, and testing will require an estimated 34 months for the first unit and 36 months for the second unit. Allowing approximately 6 months for completion to turbine-generator specification, completion of contractual and financing arrangements and other work, it is estimated that the first unit can be ready for firm commercial operation by October 1, 1965, and the second unit by December 1, 1965. RECENT ACTIONS LEADING UP TO THE WPPSS PROPOSAL Week of October 6, 1961: Washington State Power Advisory Committee voted to ask the State Department of Conservation to study the feasibility of constructing generating facilities at the Hanford NPR. Week of October 20: BPA, AEC, and the Washington State Department of Conservation agreed in a meeting at Portland "to explore every possible avenue for adding generating facilities to the new production reactor at Hanford." October 20: Executive Committee of WPPSS authorized (Resolution No. 12) assistance in non-Federal construction of power facilities at the Hanford reactor and offered the services of WPPSS in financing construction of the power features of the project, "and if determined to be economically feasible to serve as the non-Federal entity for this purpose. November 9: WPPSS sent copies of Resolution No. 12 to Mr. Charles F. Luce, Administrator of BPA, and Mr. J. E. Travis, Manager of the Hanford operations office, confirming the desire of WPPSSto 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 economically feasible, to serve as a non-Federal entity for this purpose. November 28: WPPSS sent letters and "a preliminary statement of basic criteria and proposed terms and conditions of agreement for WPPSS construction of NPR power facilities" to Mr. Luce and Dr. Glenn T. Seaborg, Chairman of the Atomic Energy Commission. The letter submitted a proposal and request to enter into negotiations jointly with the AEC and the BPA leading to the execution of necessary contracts and agreements which could result in the financing, construction, and operation by WPPSS of power production and associated facilities utilizing heat from the Hanford NPR. WPPSS PROPOSAL TO AEC AND BPA; CONTRACTS On November 28, 1961, the WPPSS submitted a letter proposal to AEC Chairman, Dr. Glenn T. Seaborg, and BPA Administrator, Charles F. Luce, proposing that WPPSS undertake the financing, construction, and operation of the NPR. CONTRACTS FOR EFFECTUATING THE WPPSS PROPOSAL The accomplishment of this proposal hinges upon two principal contracts which must be formulated. Each of these contracts would extend until revenue bonds to be issued by WPPSS on the project are retired, or provision made for their retirement. The principal functions and relationships of these contracts to each other may be described briefly as follows: AEC-WPPSS CONSTRUCTION AND OPERATING AGREEMENT This agreement between WPPSS and AEC would provide for the financing, construction, and operation of the power generating facilities by WPPSS. During the period when the NPR is operated for its primary purpose of producing plutonium (dual-purpose period) AEC would make available to WPPSS the waste steam from the NPR, under terms to be agreed upon. Subsequent thereto, when plutonium production is no longer required (power only) a lease would go into effect automatically for the remainder of the contract period; this lease would provide for the operation by WPPSS of the NPR as well as its operation of the electric power facilities. The agreement would provide that AEC may at any time during the power-only period recover the NPR in the event that it is required to resume production of plutonium. The agreement would prescribe the construction and operating standards under which WPPSS would function; it would be subject to the approval of BPA. BPA, AEC, and WPPSS would coordinate in planning NPR and power facility operation and maintenance in a manner consistent with the primary purpose of the NPR. BPA-WPPSS EXCHANGE AGREEMENT This agreement would be entered into between BPA, WPPSS, and each of the participants. It would provide for the delivery by WPPSS of the entire electrical output of the project to the participants on a proportionate basis, and immediately the participants and the Supply System would transfer the entire project output to the Government. All power and energy delivered to BPA would become subject to disposition in the same manner as that produced by Federal projects and would be integrated with other Federal resources for the supply of BPA customers within the region. In return for the project output, BPA would credit each of the participants in energy at Bonneville rates now or hereafter in effect, in an amount equal to the respective participant's share of project annual costs payable by it to WPPSS. The agreement would set forth standards of operation, maintenance, and fiscal management. The agreement would provide for an option by the Government to acquire the project without charge when all bonds or other obligations issued by WPPSS for project purposes have been paid, or at any time during the life of the project upon payment of such bonds and obligations. The participants would pay to WPPSS each year an amount in the aggregate equivalent to the total annual project costs to WPPSS, including bond service requirements. LEGAL AUTHORITY FOR PROPOSED CONTRACTUAL ARRANGEMENTS It is the opinion of the attorneys that there is adequate authority under existing statutes to complete the project. It is not contemplated that any new legislation will be presented on the subject. AUTHORIZATION REQUIRED In order to proceed in an orderly and timely manner to bring the remaining investigations, studies, and negotiations to an ultimate conclusion which will permit WPPSS to proceed with the sale of revenue bonds for the project financing, it is anticipated that the following authorizations will be required: BONNEVILLE POWER ADMINISTRATION A full report on the project will be made to the Congressional Appropriations Committees, the Joint Committee on Atomic Energy and the Bureau of the Budget at the time of the presentation of the fiscal year 1963 budget program in committee hearings. No appropriation is required from the committee. ATOMIC ENERGY COMMISSION Upon receipt by WPPSS of a response from AEC to the Hanford NPR electric facility proposal, it is presently anticipated that required negotiations will be undertaken at once. PARTICIPATING BPA UTILITY CUSTOMERS It is necessary to obtain an initial expression of interest on the part of these utilities to enter into the required arrangements with WPPSS and BPA. Upon the receipt of a satisfactory expression of interest from the prospective participating utilities, drafts of the required agreements between the parties will be prepared jointly by WPPSS and BPA as a basis for reaching final agreement on the part of all parties. Final action on the part of the participating utilities will be taken only upon appropriate action by their respective governing bodies and officers. APPROVING LEGAL OPINION The sale of revenue bonds by WPPSS to finance the NPR power facilities will require the approving opinion of WPPSS bond counsel in addition to such other legal opinions as may be required. For this reason, consultation with representatives of the law firm of Wood, King, Dawson & Logan, nationally recognized bond counsel, with 86392 62 |