year of expenditure and excluding inventories--approach the $1.4 billion value. The replacement costs of such facilities would be over $2 billion--in 1983 dollars, excluding inventories. The progress of the research and development work has been documented well and reports are available to interested parties and/or the public, so it is safe to say that the Nation has not lost or wasted the benefit of those endeavors. As to redirection of the breeder program to take advantage of 30 years of development and expenditures in the billions of dollars, the breeder base program has been restructured to focus on resolving those issues that are key to improved breeder economics and predictable, safe performance. Our R&D program complements industry efforts by emphasizing four principles: first, technology research and development necessary for a breeder system that has less complicated safety systems, is reliable, is competitive with alternative energy sources, and meets the market needs of utilities; second, development of advanced plant concepts; third, substantial international collaboration; and fourth, development of LMFBR fuel cycle technology. The technical expertise within the national laboratories and test facilities is being directed toward these ends. QUESTIONS SUBMITTED BY SENATOR HATFIELD Nuclear Power Future Question: As your statement indicates, nuclear power has had its share of setbacks lately. Moreover, it is now viewed as an unacceptable business risk by the nation's utilities. What is your view of the future? Will the Light Water Reactor (LWR) industry be revitalized? Answer: In answering the first of these two questions, in the short term we believe that there will continue to be a number of cancellations of plants where significant investment is already committed. There are approximately 48 nuclear plants under construction at the present time. Approximately 25 percent of the projects have serious financial or regulatory issues that must be resolved for the project to go forward. It is not clear at the present time how or if these issues will in fact be resolved. In response to the second part of the question, the light water reactor industry must be revitalized as the United States needs both coal and nuclear power for large central station electric power generation. In the last year, as the economy has recovered, the electric growth rate has increased significantly, i.e., more than 3 percent for the past year relative to the previous year, and more than 8 percent for the last two quarters when compared to those same quarters last year. Question: In your view, is fundamental change in the industry necessary--such as a shift to new reactor concepts? Answer: There are fundamental changes required in the nuclear industry if it is to be revitalized. The fundamental changes required include a more efficient, rational, and stable nuclear licensing process, an increased capability for utilities to raise capital necessary for large central station powerplants be they coal or nuclear, and improved public acceptance of nuclear power. The fundamental problems with nuclear industry today are institutional, financial, and regulatory, and not technical. Therefore, most of the fundamental changes required are in these particular areas. However, advanced reactors, and in particular, smaller reactors will be examined carefully and objectively by the Department over the next year. These smaller reactors may be a better match to the institutions, that is the utilities. They may better match the grid size, the financial capability, and management capability of utilities. The interest during construction for these reactors would be less and the potential for central shop fabrication would make standardization easier, may result in better economics of mass production, facilitate better quality assurance, and shift the technical and regulatory risks from the utility to the supplier sector. Nuclear Power Problems Question: On page 2, you indicate that this "disturbing situation is the result of complex and interrelated economic, regulatory, and institutional problems, rather the technology." What are some of the specific problems? Answer: Some of the major economic, regulatory, and institutional problems confronting the nuclear industry today are, first, an inefficient unpredictable, and unstable nuclear licensing and regulatory process; second, the inability of utilities to raise sufficient capital for large central station powerplants due to current rate regulation practices; and third, poor public acceptance of nuclear power. Question: How much of the problem, in your view is poor utility--construction management of nuclear projects? Answer: When many of the nuclear projects that are having difficulty today began in the early 1970's, their costs and the scope of the project were manageable. Since the early 1970's, the recession and inflation combined to reduce load growth and increased interest rates. At the same time, regulatory requirements were increased and the costs of the plants increased dramatically due to both an increase in these requirements, the inflation and recession, and unanticipated difficulties in constructing these powerplants. The public utility commissions were at the same time under pressure during these periods of inflation and recession to hold down electric rates and, attempting to do so, put additional financial pressure on the electric utilities. All of these factors combined made the management of nuclear projects extremely difficult. Some of the very best managed electric utilities were able to continue with their projects and complete them within reasonable costs and schedules. However, the average and poorly managed utilities have found it extremely difficult, if not impossible, to continue with their nuclear powerplant projects under these conditions. Breeder Reactor Systems Question: Comment on your efforts to refocus the base breeder program in light of the termination of CRBR. For the record, provide a detailed breakdown comparing FY 1983, FY 1984, and FY 1985, focusing on operating expenses and FTE's. Answer: The breeder base program has been restructured to focus on resolving those issues that are key to improved breeder economics and predictable, safe performance. The federal R&D program complements industry efforts by emphasizing four principles: first, technology research and development necessary for a breeder system that has less complicated safety systems, is reliable, is competitive with alternative energy sources, and meets the market needs of utilities; second, development of advanced plant concepts including feasibility assessment with input from the user industry; third, substantial international collaboration; and fourth, development of LMFBR fuel cycle technology. The technical expertise within the national laboratories and test facilities is being directed toward these ends. Ultimate responsibility for breeder reactor commercialization including timing, funding, and management resides with the private sector. Operating expenses and FTEs for FY 1983 and projected for FY 1984 and FY 1985 are herewith provided for the record. It should be noted that this data includes the Fuel Cycle program and that the FTE estimates are subject to undeterminable factors such as voluntary retirements or reassignments, timing of reductions-in-force, and so forth. Energy Technology Engineering Center Question: Please describe the ETEC project--under the base program--and explain the reduction in FY 1985. Answer: The base program for FY 1985 will support the following activities at the Energy Technology Engineering Center: first, we will complete the installation of the 70-megawatt singlewall, helical coil tube steam generator model in the Sodium Components Test Installation or SCTI; second, we will begin system checkout and crew training for the test program associated with the 70-megawatt steam generator; and third, we will complete the installation of the Clinch River Breeder Reactor Plant prototype steam generator as an economizer in the SCTI to reduce testing costs of the 70-megawatt helical coil unit. The proposed FY 1985 program represents a reduction of work. The previously planned testing of an 85,000 gallons per minute primary sodium pump has been deferred, and modifications to the Sodium Pump Test Facility to support this testing will be discontinued pending definition of future pump test requirements. CRBR Closeout Question: Discuss any problems with the closeout of CRBR activities. Answer: The problems that have arisen are typical of those that occur in terminating a project of this magnitude, involving such activities as arranging for alternative use of the CRBRP site or redress of the site if no use can be found; settlement of almost 300 terminated subcontracts; arranging for the ultimate use or disposition of $500 million worth of components, materials, and other equipment; and establishing a mechanism for storage and retrieval of technical information developed during the course of the project. These are just a few of the activities which need to be accomplished. The Department ́s Oak Ridge Operations Office is responsible for managing termination activities of the Clinch River Breeder Reactor Project and has prepared a termination plan that describes the activities which need to be accomplished and their estimated costs. The schedule for conducting the termination calls for completion by the end of FY 1985 at a total cost of $171.6 million. Large Scale Prototype Breeder Question: Why are no funds requested in FY 1985 for the Large Scale Prototype Breeder? Answer: The Large Scale Prototype Breeder program has been a joint effort of the Federal Government and private industry to develop a large scale prototypical breeder demonstration plant. Private industry was to be responsible for the construction of the plant with the government aiding industry in the responsibility for the first of a kind plant costs. The plant was to have been the logical follow-on to the CRBRP project as a full-scale demonstration plant. It is now clear that the responsibility for future demonstration plants will lie with the private sector. Therefore, the government-sponsored design efforts on a large scale prototype breeder plant will be phased out in an orderly manner during FY 1984. The LSPB design will be maintained as a frame of reference for benchmarking advanced concepts developed under the base program. Question: Explain the current status of the program funded with $15 million in FY 1984. Answer: In FY 1984, the LSPB plant conceptual design effort is being brought to an orderly completion. This will establish the LSPB as a cost and technical baseline reference for future breeder studies and safety evaluations. The current LSPB concept was developed in a joint effort that had been started in FY 1983 by the Department and the Electric Power Research Institute. The current concept achieved a major reduction in the dollars per kilowatt plant cost as a result of a number of simplifications and optimizations derived from an aggressive commercialization analysis, input from the utility industry, and consideration of international LMFBR design developments. To maximize the value of the LSPB as a cost and technical baseline, the FY 1984 conceptual design effort includes technical verification reviews, documentation of plant arrangements, structures, systems and components, and preparation of cost estimates, engineering and construction schedules, and safety discussion documents. Concepts Requirements Development Question: Explain the need for the new "concepts requirements development" effort. Answer: The new concepts and requirements development effort is planned to stimulate new low cost, improved safety, liquid metal fast breeder reactor designs that will be attractive to users while providing a clear indication of research and development needs to be supported by the base program. In this fashion, the base program activities can be focused on those problems which will aid in the timely introduction of the breeder to the national energy mix. The overall objective of the effort is to develop one |