CONCLUSION

Dr. WILSON. In conclusion, I wish to give public recognition, on behalf of the Commission, to the many members of the AEC staff who have worked so hard and long in these contract negotiations, trying to solve the many difficult and complicated problems of being fair to the Government, the utility industry, NFS, and their possible future competitors. I also want to acknowledge the patient and understanding way in which Mr. McGuirk, Mr. Runion, and others associated with NFS have worked with them. I dare say if they had foreseen all the difficulties involved in negotiating with the AEC and the utility companies, they might never have started nor spent so much money in making plans and preparations. However, now that we can both see the end in sight, we can all be gratified that we have stuck at the job. I am confident that we are about to embark on a cooperative effort which will enable us to fill an important gap in the private enterprise portion of the nuclear industry, and to get the benefits of cost reduction and cost information on reprocessing different types of fuel elements which can only come from experience in that operation. I am also gratified that the Government will not have to look forward to an indefinite period of having to handle and store, and trying to de-. termine the proper charges for reprocessing, all different types and quantities of fuel elements from different reactors.

This concludes my prepared statement. Members of the staff more familiar with many of the details are with me today and would be pleased to answer any questions the committee may have.

Commissioner Ramey also may have some comments at this point. Representative PRICE. Thank you, Dr. Wilson, for a very clear and concise summary of the NFS project and the Commission's part in connection with it. I am sure there will be many questions that the committee will want to ask in connection with this project. Senator Curtis ?

TIME SCHEDULE FOR DEVELOPMENT OF FACILITY

Senator CURTIS. What is the time schedule for the development of this facility?

Dr. WILSON. When the construction will start or when the plant will be completed?

Senator CURTIS. Both.

Dr. WILSON. If we are able to conclude a satisfactory contract, the completion date on a best efforts basis will be April 1, 1965.

LOCATION OF PROJECT

Senator CURTIS. Where will this be located?

Dr. WILSON. In western New York State.

Senator CURTIS. How far is it feasible to ship these fuels for processing?

Dr. WILSON. Any distance. It is just more costly the farther it has to go, but it can be shipped any distance.

Senator CURTIS. At least in the foreseeable future it would be the only non-Government reprocessing plant in this country?

Dr. WILSON. We would look for probably the next plant to be built by competitive industry, hopefully in 5, 7, or 8 years, on the Pacific

coast so that the fuels which are generated out there could save something on their shipping to offset the higher cost of operating two plants. This present plant is very well located, better located than any Government plant from the standpoint of the bulk of the fuels which are generated. That is just about the center of the Dresden, Yankee, and Consolidated Edison reactors.

Mr. CONWAY. The proposed reprocessing plant in New York will not be well located for servicing reactors located in California.

Dr. WILSON. It is not so good for the ones in California, as I said. But for the greater number of fuels it is. I think the ones in California will have to undoubtedly look forward to a plant in that vicinity as the next plant. They might store their fuels for the last couple of years there rather than ship them.

Mr. CONWAY. You don't think the California plants would use this facility?

Dr. WILSON. Yes, I do.

Senator CURTIS. This next question is not anticipated either to state a policy or to seek a commitment. It is conceivable that the distance to ship, involving both the freight costs as well as the time, could be a factor in determining the extent to which the fuel use charges might be relaxed to a user of fuel while shipping it to this point in western New York; is that right?

Dr. WILSON. You mean if they wanted to store it at their plant rather than shipping it. I don't know whether we could justify a different policy with regard to waiving of use charges for a man that has to ship a long distance than one who has to ship a short distance or not. I really have not faced the problem.

Senator CURTIS. That is why I say right off the cuff I would not expect either a commitment or a statement of policy, but it is at least one thing that could be thought of; is that right?

Dr. WILSON. That is right.

Senator CURTIS. Because here a license is being granted to construct a facility to be located in the Eastern part of the country. The next chemical reprocessing plant to be constructed will probably be located on the west coast. As always, the customers located in the Central States will bear the burden on transportation costs.

Dr. WILSON. That is right. Of course, the Savannah River location, which was the principal alternative, would have been even farther from most of the power reactors.

Senator CURTIS. I understand. I thank you, Mr. Chairman. Dr. WILSON. Commissioner Ramey may have some comments. Representative PRICE. Do you have any comments, Mr. Ramey? Mr. RAMEY. I might make some at the end of the session.

PRIVATE ENTERPRISE'S PARTICIPATION IN THE NUCLEAR INDUSTRY

Representative PRICE. I expect you will, and we will be glad to have them. Dr. Wilson, can you see any parallel in this situation at this point with the situation in connection with bringing Allied Chemical into the fuel business as a private venture several years ago? Dr. WILSON. Yes.

Representative PRICE. What is the parallel?

Dr. WILSON. The parallels were that at that time we needed additional capacity and we thought we should give private industry a chance to get in. Now the situation is changed, in that we do not need additional capacity. We have more capacity than we need.

Representative PRICE. You have more capacity than you need but you are continuing to go forward to try to bring private industry more and more into the picture.

Dr. WILSON. That is right.

Representative PRICE. Yet at the same time we see the elimination of one of the first private enterprises to participate in the nuclear industry.

Dr. WILSON. If it does. We have not decided that matter. That is the thing we have to balance.

Representative PRICE. Since you are encouraging private enterprise to participate in the reprocessing of fuel elements, don't you think it is of some measure of importance to keep other private operations in the nuclear industry?

Dr. WILSON. The Commission has that very much in mind. The question is just how much can we afford to pay for that, just as we are making certain sacrifices here for a few years because we want to get private enterprise, private industry started. If the Metropolis plant were to close down it would leave another gap in the private nuclear industry which we would hate to see.

Representative PRICE. I would also hate to see us get in the position of bringing private industry into the nuclear industry on a 5-year basis and at the end of the 5-year period leaving them dangling. This could also happen in this nuclear fuels service project, could it not?

Dr. WILSON. I think this is bound to increase. The processing of nuclear fuels, if our prognosis is anywhere near right, is bound to increase. In other words, we would not have any facility in the Government that was particularly well adapted to this. In fact that is why we are anxious to get this plant started, because if we made our decision on the grounds that there was not enough business to keep this plant busy, to build our own facilities, then it would always be hard for private industry to get in. I think now is the logical time.

GOVERNMENT SUPPORT AFTER EXPIRATION OF THE PROPOSED CONTRACT

Representative PRICE. Do you think it is foreseeable, though, that at the end of the 5 years, which is your initial commitment with NFS, that they could continue to be a successful operation if the Commission withdrew Government support of the project?

Dr. WILSON. I doubt it.

Representative PRICE. So it is almost a certainty that the Commission will have to be in this for more than 5 years?

Dr. WILSON. On a decreasing basis, I should think. We would feel under considerable compulsion although under no obligation. Representative PRICE. Senator Curtis.

TYPES OF REACTOR FUELS TO BE REPROCESSED BY PROPOSED FACILITY

Senator CURTIS. I wanted to ask whether this plant will be so designed that it can process the nuclear fuels from all existing nuclear powerplants?

Dr. WILSON. No. They deliberately cut down the cost of the plant somewhat so as not to have to provide a tremendous amount of flexibility for some small quantities of fuel that would be produced in special cases or some things that are particularly difficult to handle. Of course, no one can foresee what types of fuel may go into this service in a few years from now. Every person that comes along has different ideas of how fuel elements could be designed. So they could not really make provisions for all types of fuel there.

Senator CURTIS. For all types of fuel now in use, that is what I

mean.

Dr. WILSON. No, not for all types of fuel now in use.

Senator CURTIS. What plants would or could not ultimately be served by the NFS plant?

Dr. WILSON. Mr. Quinn will answer.

Mr. QUINN. Senator, the fuels that the NFS plant, as it will be initially constructed, will not be able to handle are the sodium bonded fuels from the Hallam reactor, and the blanket material from the Fermi reactor.

Senator CURTIS. Where is Fermi located?
Mr. QUINN. This is in Detroit.

Senator CURTIS. They are the only two?

Mr. QUINN. Those are the only two of the power reactor fuels as such. There are some fuels used in the Army power reactors, for example, which are stainless steel cermet type fuels which NFS likewise will not have a capability to process with the initial plant that is built.

Senator CURTIS. How much is saved in capital outlay by the more narrow conception of its mission?

Mr. QUINN. If I may add one more, before answering your question, Senator, there is one type of fuel which will be used in the Peach Bottom reactor which is of quite a different nature than the other kinds. It will be a graphite-type fuel. The AEC conceptual plant had no capability for that type of fuel and neither does NFS so that should be added to the list. In response to your question, we understand that elimination of the originally planned capability for the more difficult fuels resulted in a reduction in the cost of the NFS plant of about three-quarters of a million dollars.

Senator CURTIS. Out of a total of how much?

Mr. QUINN. Out of a total project cost of approximately $30 million.

Senator CURTIS. 2 percent?

Dr. WILSON. This decision not to go ahead with these special fuels is subject to review by NFS and they may very well decide to increase the load for the plant at a later date by adding those facilities, especially if there should be other plants designed.

Senator CURTIS. It is three-quarters of a million dollars out of a $30 million project that would be about 2 percent?

Mr. ABBADESSA. That is right, sir. A more precise figure would have been $24 million. That is the actual plant cost, from which $775,000 was removed. Another contribution this makes, however, to the project is the fact that these are complex type fuels to process. One of the concerns is the startup period and the ability to process these fuels. To the extent that these complex fuels were removed,

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we would hope that there would be less trouble during the startup period, and to this extent there would also be a favorable financial impact.

Senator CURTIS. But the AEC program for reprocessing fuels would continue with respect to those types of fuels which could not be reprocessed by NFS, at least for the foreseeable future, until something better comes along?

Mr. ABBADESSA. That is right.

Mr. QUINN. AEC would continue to accept fuels of those types until a private capability was available.

Dr. WILSON. We would make payments for the content and deduct the cost of processing whether or not we actually had the fuels. We might save them for a year or two, hoping the NFS would add facilities to take them. But we would not withdraw our proposal. Senator CURTIS. Thank you, Mr. Chairman.

PURPOSE OF GOVERNMENT SUPPORT OF NFS PROPOSAL

Representative PRICE. Mr. Morris?

Representative MORRIS. Dr. Wilson, actually what is the purpose of getting Nuclear Fuels Services, Inc., in the business? Is it to promote private enterprise?

Dr. WILSON. It is to promote private enterprise and to get the Government out of a very complex business which I don't think the Government is particularly well qualified to handle. This negotiating with each individual fuel processor regarding their particular type of fuel is going to get more and more complicated. I think it is something that really belongs in the private sector of the business.

HISTORY OF NEGOTIATIONS FOR REPROCESSING FACILITIES

Representative MORRIS. Who else did the Commission negotiate with besides this company?

Dr. WILSON. There were quite a number in the early days. We tried to get them interested. Do you recall what the companies were? Mr. QUINN. About 6 or 7 years ago we did explore with industry their interest in undertaking a private reprocessing plant. A number of information meetings were held which were widely attended by a number of companies. At that time we made known that the Commission was willing to provide some Government fuels to help a private plant get started, but the judgment of industry then was that there was not sufficient private load available. The Commission has kept open its offer.

Representative MORRIS. What year was this? You said 5 or 6 years

ago.

Mr. QUINN. 1956 and 1957, Mr. Morris.

Representative MORRIS. You met with various companies?

Mr. QUINN. We met with a number of companies.

Representative MORRIS. Do you remember the name of any of them? Mr. QUINN. Yes, the Koppers Co. was quite interested; SylvaniaCorning was quite interested. Those are two I recall.

Representative MORRIS. Did you offer those companies the same proposition that you offered Nuclear Fuels Services, Inc.?