Representative PRICE. They probably are talking in terms of fiscal years. It doesn't state here. For the purposes of the record would you make a formal comment on both these two subjects just mentioned, the staffing and the load factor?

That is, the figures on the staffing of 129 employees as against the technical consultant's judgment that you would require twice that number of employees, and the estimates of 1,500 units as against 1,200 units of load.

Mr. RUNION. First I will take the load figure. I believe there is a 6-month interval in which the AEC is using and we are using. I believe this would as I say add some portions of load to the AEC figure if they were on the same basis we were.

Representative PRICE. There is obviously a difference of judgment. Just for the purposes of the record you look it up and analyze your position on it and furnish it for the record.

Mr. RUNION. Yes, sir.

(The statement referred to follows:)

NFS COMMENT ON CHEMICAL PROCESSING LOAD AVAILABLE TO THE NFS PLANT DURING ITS FIRST 5 YEARS OF COMMERCIAL OPERATION

The AEC has used the figure of 1,200 revenue units available to the NFS plant in computing potential earnings and cash flow of NFS during the first 5 years of commercial operation. This load will be made up of 625 revenue units of AEC baseload and the remainder from privately owned reactors. NFS has stated a need for 300 revenue units of chemical processing annually in order to make a modest return on its investment, which would total 1,500 revenue units for the first 5 years of commercial operation, NFS believes that this load will be available to it.

As we understand the AEC's load analysis, their projections substantially coincide with ours. However, there are five significant considerations which could account for the differences in the magnitude of our respective projections.

(1) Delay in plant startup.-The AEC has assumed full operation of the NFS plant by July 1, 1965. NFS expects to be onstream in late 1965, and in full operation in early 1966. The 6-month period from July 1, 1965, to January 1, 1966, which is required in order to achieve full operation, and which has been provided for with "preoperational funds," results in the 5-year period under consideration ending on January 1, 1971, as opposed to July 1, 1970, if the AEC assumption were to be valid. This additional 6 months will enable NFS to accumulate the corresponding amount of fuel generated in that period, resulting in an increased load available to NFS during the first 5 years of commercial operation.

(2) Delays in reactors in reaching full power.—In projecting the potential load the AEC has assumed that reactors which are to come onstream in subsequent years will experience delays in startup and will require several months to attain full power. It is believed that for standard UO2 reactors sufficient experience has been gained that these delays will be significantly shorter than for the first reactor that went into operation.

(3) PRDC.-The AEC load projections do not include the processing of the Enrico Fermi fuel. We have negotiated a chemical processing contract with PRDC for this fuel, and such could provide significant additional material for processing during the first 5 years of commercial operation. Even if the Fermi reactor operates at relatively low power levels and load factors, there are still two cores which have already been fabricated and which we can be reasonably assured will become available to NFS for reprocessing.

(4) Foreign load.—The AEC has not included any foreign load in their load projections. Since the reprocessing facilities available in Europe are limited in capacity for limited fuel types, and in many respects are experimental in nature, it is expected that the economics will favor the reprocessing of some of these fuels in the NFS plant until such time as production processing facilities are available in Europe, assuming reasonable resolution of problems. This should provide an additional load to the NFS plant during the first 5 years of commercial operations.

(5) Batching.—The AEC has assumed in their load projections that each reactor operator will hold his fuel until he generates a processing load sufficiently large to obtain the most economical reprocessing costs. This could mean that fuel generated in the first 5 years would not be available until some point in the second 5-year period. NFS has provided in the contracts with the various utility companies for the batching of fuels between utility companies which obviates the need for storing and thus increases the load available to the NFS plant during the first 5 years of commercial operation.

It is the belief of NFS that the AEC load projections plus the 5 considerations outlined above provide a reasonable basis for projecting that about 1,500 revenue units of chemical processing will be available to the NFS plant during the first 5 years of its commercial operation.

GOVERNMENT SUPPORT AFTER EXPIRATION OF PROPOSED CONTRACT

Representative PRICE. How long do you think you will need Government help in the form of reprocessing load from the Government? Will the initial 5-year contract be sufficient?

Mr. RUNION. I will say this. That the subject of load is one of the most difficult aspects of this entire project to evaluate and it is one that we have looked at, I believe, in the greatest depth. We have done our analysis ourselves. We have had these analyses reviewed by a man like Manson Benedict as an independent expert. We had a more recent review of our load figures and load projections carried out by Pickert, Warren & Lowe, as consultants to NFS. We have reviewed the AEC's load projections and we find a widespread difference in these various opinions. If we take the most optimistic growth of the business we can see another plant built within 5 years with enough load to occupy both of us. On the other hand if we take the most conservative basis we still may be able to keep the doors open but it would be a tight picture for us.

RESEARCH AND DEVELOPMENT SUPPORT TO BE PROVIDED BY AEC

Representative PRICE. You made some proposals on research and development assistance which were not acted upon by the Commission. Do you believe you will need research and development contracts from the Government before you complete this program or if you are called upon to expand the plant in any way, would you need research and development assistance?

Mr. RUNION. There are no elements of R. & D. in the proposals, that is the main proposal we have made to the Commission, nor do the proposals we made carry any specific R. & D. as a contingency. We certainly hope that the Commission as they have indicated will continue to carry on the program they have had up to date. As I have indicated we hope they will expand it because the results that they generally are going to obtain will be helpful to us. We have also reviewed this program with them, and as we have seen the specific problems that have grown out of our efforts to get a plant started, we have made them aware of them and have suggested this as a course of direction they might include in their basic and general objectives. We certainly hope the door is not shut to us for research and development contracts although we have not given it as a basic requirement of going on with the plant. Such programs will give us increased assurance wherever the Commission carries out these programs each time we look at a new fuel if the Commission has gone through such programs.

SCHEDULE OF THE PROJECT

Representative PRICE. What time deadlines are there on proceeding with the project?

Mr. RUNION. We have a very critical deadline.

Representative PRICE. I think you mentioned it in your statement, but I would like to have it referred to.

Mr. RUNION. We have a critical deadline on initiating ground breaking at the site. Bechtel is going with all steps necessary to begin actual ground breaking within a week's time. There are plans for labor conferences. There are purchases of concrete and reinforcing steel already made and moving toward the site. We propose to execute the contract with Bechtel very shortly in the absence of any developments that indicate we should not.

Mr. CONWAY. You have already done some site clearance?

Mr. RUNION. There is a small lot contractor in the field now who is fencing the site, who is clearing railroad right-of-way, and making some other minor construction work.

DELAYS IN STARTUP OF PLANT

Representative PRICE. Would you care to comment on the consequences of a year's delay or a 2-year delay or even a few months' delay on the time when the plant would be in operation?

Mr. McGUIRK. I would like to comment to that question. We have Dr. DeSimo and Dr. Davis of Bechtel and I think they could give you an indication that it would be something like $80,000 to $100,000 a month in terms of the normal escalation of costs and inflation factor that would result from any delay. In other words, 1 year would cost us roughly a million dollars. I think you might ask Dr. Davis to comment on them.

Representative PRICE. We could have a comment from either one or

both.

Dr. DAVIS. That is approximately correct.

Representative PRICE. What was your comment again?

Dr. DAVIS. The cost which would be incurred in simply delaying the project at this point and delaying the start of construction through excavation and overhead costs and so forth would be certainly in the range of roughly a million a year that was quoted, at $80,000 to $100,000 a month. In addition to that, it is quite critical as Dr. Runion has pointed out to start construction immediately if you are to get indoors by next winter which is quite severe in that area.

SCHEDULE OF THE PROJECT

Representative PRICE. Thank you. How confident are you that you will be able to complete this plant on schedule?

Mr. MCGUIRK. I think that is properly addressed to Dr. Davis. Representative PRICE. We have another question for you, Dr. Davis. How confident are you that you will be able to complete the plant on schedule?

Dr. DAVIS. We are very confident we can.
Dr. WILSON. If it is started on schedule?
Dr. DAVIS. If it is started on schedule.

The contract is based to

start May 1, 1963, and completing construction by April 1, 1965. Representative PRICE. What is the starting date?

Dr. DAVIS. May 1, 1963.

Representative PRICE. I don't think you will make that one. Unless you can call the ground preparation a start. You probably meant the actual heavy construction start; is that right?

Dr. DAVIS. Yes, sir. We are ready to go just as soon as we possibly

can.

Representative PRICE. You put that schedule in your statement. Mr. RUNION. We could give you a specific construction schedule. Representative PRICE. I thought you referred to it in your state

ment.

Mr. RUNION. No, we will put that in the record.

Representative PRICE. We would like to have a schedule of construction for the record.

(The schedule referred to follows:)

ESTIMATED SCHEDULE FOR NFS PLANT

May 20, 1963: Start plant construction.

November 15, 1963 : Plant substructure construction complete.

January 1, 1965: Complete construction of fuel receiving and storage facilities and commence receiving and storage of fuel.

July 1, 1965: Complete construction of all plant facilities and initiate startup operations.

January 1, 1966: Complete shakedown operations and achieve design operation.

BECHTEL CORP.,
San Francisco, Calif., May 1, 1963.

Subject: Bechtel Job No. 4413; Nuclear Fuel Services, Inc.; spent fuel processing plant; Progress Report No. 5. BL-202.

Mr. C. W. TAYLOR,

Nuclear Fuel Services, Inc.

Washington, D.C.

DEAR MR. TAYLOR: We are forwarding 12 copies of our progress report covering design, procurement, and construction of your spent fuel processing plant as of May 1, 1963.

Engineering work is proceeding in all areas with emphasis on finalization of piping and instrument diagrams, plant layout, and structural design of the fuel pool and waste tank areas.

Quotations have been requested on 28 vessels, 2 tanks, 40 exchangers, 8 compressors, 2 boilers, 34 pumps, and 43 miscellaneous items. The outdoor switch station and power transformer were released for purchase.

Seventy-two drawings have been issued for quotations and/or approval and nine for construction.

Engineering is 22 percent complete overall.

Very truly yours,

JOHN F. O'CONNELL,

Vice President, Refinery and Chemical Division.

SPENT FUEL PROCESSING PLANT, NUCLEAR FUEL SERVICES, INC., CATTARAUGUS COUNTY, N.Y.-DESIGN, PROCUREMENT, and ConstrUCTION-PROGRESS REPORT No 5, APRIL 1963

Bechtel Corp. Refinery and Chemical Division, Job No. 4413

Basic process design work is essentially complete.

Design of the process mechanical cell by AMF is proceeding. The cell size has been frozen. Work continues on the general purpose cell.

Work continues on the ventilation system design analysis and P. & I.D.'s. The preliminary balances prepared for the steam, air, and water systems are being reviewed.

Work continues on the utilities P. & I.D.'s.

Design and drafting work continues on the fuel pool foundations, structure and storage racks.

All process P. & I.D.'s have been reviewed and are being prepared to issue for construction.

The overall plant layout was issued for approval. The final models for extraction cells 1, 2, and 3 were started.

Principal project personnel in San Francisco:

Sponsoring engineer: D. R. Ferguson.
Project engineer: P. E. Carroll.

Assistant project engineer: E. C. Stokes.
Process supervisor: G. A. Vincent.

(See pp. 91 and 92 for charts belonging to this report.)

DELAYS IN STARTUP OF THE PLANT

Representative PRICE. How long do you think the startup period will be?

Mr. RUNION. I think we have had estimates of 1 month to 2 years. Our own judgment is that we should reasonably expect to start this plant in 3 months' time. We have allowed contingencies in our cost to carry us as long as 10 to 12 months, depending on the level and the rate of the expenditures we are carrying for that period.

Representative PRICE. On page 4 of your statement, Mr. Runion, you indicated that by 1965 the backlog of spent fuel requiring reprocessing would create storage problems and that the plant should be in operation not later than January 1966. Even if the plant is in operation by January 1966, won't there be substantial down periods of relatively low production? If the plant ran into any real problems in operation, couldn't a serious problem be created?

Mr. RUNION. No; I don't believe we anticipate any startup problem as related to our storage facilities. We are also prepared if it appears desirable in this interim to push ahead with early completion of our storage facilities and those storage facilities could serve their purpose of receiving a backlog of fuel even if the startup was difficult. The storage facility has a capability to store the entire plant capacity for about 1 year.

NFS CHARGES FOR SERVICES

Representative PRICE. How are you able to commit yourself to basic fuel reprocessing charges for the next 15 years without operating experience?

Mr. RUNION. Without any operating experience?

Representative PRICE. Yes.

Mr. RUNION. We have a substantial amount of operating experience, not necessarily processing spent fuel. The way we have approached this business is to incorporate the normal cost factors that