R. Assuming NFS installs capability for sodium-bonded fuels

1. Private load.—In the event NFS installs capability to process sodium bonded fuels, the load of private fuels available to NFS would increase by about 30 revenue units-the Fermi Blanket.

2. Baseload. In the event NFS installs capability to process sodium-bonded fuels, the character of the baseload would change as AEC would provide the Hallam fuels (about 76 revenue units) as part of the baseload. The changes would result from substitution of Hallam fuels for more expensive baseload fuels.

3. Prior year accumulation.—In the event NFS installs capability to process sodium-bonded fuels, the amount of the prior year accumulation would increase by about 18 revenue units.

C. Assuming NFS installs capability for processing SS cermet fuels

1. Private load. In the event NFS installs capability to process stainless steel cermet fuels, the load of private fuels available to NFS would increase by about 45 revenue units.

2. Baseload. In the event NFS installs capability to process stainless steel cermet fuels, the character of the baseload would change as AEC would provide about 260 days of these fuels as part of the baseload. The changes would result from substitution of stainless steel cermet fuels for more expensive baseload fuels.

3. Prior year accumulation.—In the event NFS installs capability to process stainless steel cermet fuels, the amount of the prior year accumulation would increase by about 12 revenue units.

D. Assuming NFS installs capability for both sodium bonded and stainless steel cermet fuels.

1. Private load.—In the event NFS installs capability for both sodium bonded and stainless steel cermet fuels, the load of private fuels available to NFS would increase by about 75 revenue units.

2. Baseload.—In the event NFS installs capability for both sodium bonded and stainless steel cermet fuels, the character of the baseload would change as the Hallam fuels (76 revenue units) and the stainless steel cermet fuels (260 revenue units) would be provided as part of the baseload. The changes would result from substitution of Hallam and stainless steel cermet fuels for more expensive baseload fuels.

3. Prior year accumulation.—In the event NFS installs capability to process both sodium bonded and stainless steel cermet fuels, the amount of the prior year accumulation would increase by about 30 revenue units.

V. STATUS OF NFS NEGOTIATIONS WITH LICENSEES

A. Contracts with IRG

We are advised by NFS that negotiations between NFS and the five utilities of the IRG are essentially complete. As the IRG had not known during their negotiations with NFS what AEC was able to obtain from NFS in its contract, the IRG's agreement with NFS is contingent upon their being able to review the AEC contract and choose in 11 areas between the AEC-NFS agreement and the one they have been able to negotiate for themselves. Examples of these areas are measurements and accountability, charges, escalation and every article affecting

costs.

B. Negotiations with other utilities

NFS indicated that it would have preferred to have completed negotiations with all utilities now operating or building power reactors prior to going ahead with the project. However, time did not permit this and NFS is depending on being able to offer arrangements with these utilities that the Commission would find to be reasonable. See below re withdrawal. These other utilities are identified in appendix 4.

C. Nature of NFS utility contracts

1. Fifteen-year contract term.—NFS' original position was that they must be able to insist upon long-term contracts-expiring at the end of 1980-with their utility customers. Their ability to insist upon their customers executing such contracts would be related to whether AEC's withdrawal was firm, leaving the utilities no alternative but to do business with NFS on this basis. AEC has concluded that it could not permit NFS to insist upon such long-term contracts as a condition to providing services-of course, AEC would have no objection to any NFS customer voluntarily executing such an agreement. AEC's position was stated at a meeting with NFS and the utilities on February 15. The Chairman's opening remarks contained the Commission's position; they are attached hereto as appendix 9.

2. Class B fuels.-Class B fuels are defined as fuels for which NFS has the capability but which are different from the fuels originally specified in the NFS tility contracts. The NFS position called for a commitment on the part of the utilities to deliver these fuels with a subsequent determination of price, subject to arbitration. Such price would be related to NFS costs. The Commission believed that a broader yardstick for reasonableness of charges than NFS costs was necessary and did not agree to a blanket withdrawal from processing class B fuels. The attached opening remarks cover AEC's position on this matter.

A. Growth of nuclear industry

VI. BENEFITS TO AEC

Chemical processing is an integral part of a nuclear industry. NFS' project when successfully brought into being would close a gap in the existing industry nuclear capabilities.

B. Commission contracts with utilities

A successful NFS project would partially eliminate difficult Commission processing problems for power reactor fuels and complex settlement problems with reactor operators.

C. Perpetual waste care

The NFS project would reduce the Commission's contractual responsibility for the perpetual care of radioactive waste. Considering, however, the Commission's very large inventory and current generation of such wastes, this benefit is limited. D. Reduce AEC capital investments

AEC would have to install about $3.5 million worth of equipment at SR to handle the low enriched power fuels that NFS would process. The extent to which NFS installs the so-called deferred facilities would further reduce AEC's capital expenditures. For example, a head-end system at Idaho to handle the stainless steel-cermet fuels would cost several million dollars. If NFS does not install these deferred facilities it would be cheaper for the AEC to install them than to build storage capability. This would also likely be true for sodium bonded fuels. The $3.5 million figure quoted above might include capability for sodium bonded fuels; this has not been determined with certainty. If it did not, installation of such capacity by NFS could save the Commission an additional $1.4 million investment.

E. Technical and economic information

The NFS project will provide the Commission with important technical and economic information. Certain of this information would not be obtained if AEC were to process these fuels by modification of its own facilities. The availability of this information will be important to the future growth of the nuclear power industry and is a key motivation of AEC's encouragement of the NFS venture.

APPENDIX 3

Fuel processing-Private reactors, fiscal years 1966 and 1967 1

APPENDIX 4

Fuel processing—Private reactors, fiscal year 1966 through fiscal year 19701