(2) Motion was filed to reopen to consider THI-2 issues.
been made by them on the construction of Units 1, 2 and 3.
Applicant indicated in July 1979 that no final decision has

(4) Schedules shown are based on issuance of the final rule on TMI requirements in March.

*Information provided by telephone with follow-up written reports expected

by April 3, 1981.

ATTACHMENT 2

COST OF DELAY MATERIAL FOR MARCH STATUS REPORT
TO CONGRESS

Table 1 identifies ten nuclear units where the estimated construction
completion date precedes the completion of the licensing effort. The
NRR staff was asked to develop estimates of the costs that will be
incurred as a result of these licensing delays. These estimates
appear in the attached Table. One should be cognizant that the estimates
are highly sensitive to underlying assumptions which are subject to
much uncertainty (fuel price escalation, sources of replacement energy
available, expected performance of the nuclear unit in its initial
commercial start-up, etc.). Thus, the values reported in Table 2 should
only be viewed as benchmark estimates.

Cost of Replacement Energy

For the purpose of this assessment, the staff has assumed that all replacement energy will be made-up by capacity already on the applicant's system. Where a system is heavily committed to a particular energy source, replacement energy is viewed as coming totally from that source. If a system's capacity is heavily distributed among two or more fuel sources, the replacement energy is assumed to be equally distributed among those energy sources.

It is assumed that the nuclear unit would have operated at an average capacity factor of 60% during the delay period. The fuel costs in mills per kWh are based on the following assumptions. The fuel cost for coal, oil, and natural gas is based on actual values (¢ per MM BTU) paid by each utility as of June 1980. These values were converted to mills per kWh based on average plant heat rates of 11,000 BTU per kWh for oil and gas-fired plants and 10,000 BTU per kWh for coal fired plants. These costs were then escalated at a nominal 10% per year to reflect estimated costs in the 1981-83 time frame. The nuclear fuel cost is based on a 1977 estimate of 7.83 mills per kWh (assumes no recycle), and escalated at a nominal rate of 5% per year to reflect estimated cost in the 1981-83 timeframe. These nuclear fuel cost assumptions are based on Table 11 of NUREG -0480 (Coal and Nuclear: A Comparison of the Cost of Generating Baseload Electricity by Region).

Capital Expense During the Delay Period

The capital expense represents the interest charges associated with carrying
the capital investment during the delay period. For the purposes of this
analysis it is assumed that interest accrues on the completed capital cost
of the facility at the annual rate of 10% per year. This expense shifts
the financial burden from one group to the other and shifts payments in
time, and should not be weighted as societal costs in the same manner as
the expense of replacement energy.

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This view assumes that: (a) during the period of delay, the money retained by customers which would otherwise be paid in rates if the unit were operating can be invested at financial returns equivalent to those costs paid by the utility in carrying the plant in its construction work in progress account;*(b) there is adequate regional power supply in the short-term such that there is not need to make real economic resource commitments to expedite completion of other generating capacity; (c) the delayed nuclear unit does not deteriorate during the delay period such that its useful operational life is shortened; and (d) the delayed start-up does not result in the unit being technologically obsolete during the end of its useful life which has now been stretched out because of the delayed start-up.

*Chairman Hendrie notes that for the great majority of customers this assumption is not correct.

Commissioner Ahearne disassociates himself from this argument and this assumption.

COST OF REPLACEMENT ENERGY AND CAPITAL EXPENSE INCURRED DUE TO LICENSING DELAYS

COST

OF

(ALL COST ESTIMATES ARE IN CURRENT DOLLARS)*

CAPITAL

EXPENSE

ENERGY

Delay Capital

REPLACEMENT FUEL

Cost Per

of Unit at

Completion** Period** Month**