TABLE 1.—NUCLEAR CAPABILITY LICENSED OR PLACED IN OPERATION SINCE JAN, 1, 1970 AND CAPABILITY SCHEDULED FOR OPERATION DURING PERIOD 1971-75—Continued

1 EEI Electric Power Survey Committee data as of July 1, 1971, unless noted otherwise.

2 Central station nuclear plants, Units Operable, Under Construction, Or On Order, AEC Division of Industrial Participation, May 12, 1971.

3 Licensed since Jan. 1, 1970.

♦ Initial rating—additional capacity will be affected as periodic upratings are scheduled,

* Information supplied by PJM Interconnection.

* 404 Mw. is part of resources of lowa-Illinois Gas & Electric Co.

Key to symbols: 0—Operating License; O/P—Operating License Pending; C—Construction Permit; C/P Construction Permit Pending.

TABLE II.—EFFECT OF 1- AND 2-YEAR DELAY IN OPERATION OF SCHEDULED NUCLEAR GENERATING CAPACITY

32

SPEECH BY PRESIDENT, ATOMIC INDUSTRIAL
FORUM, INC.

NUCLEAR POWER: PROSPECTS AND PROBLEMS

(Howard M. Winterson, President Atomic Industrial Forum, Inc.) Thank you for giving me the opportunity to discuss nuclear power and its place in the total energy picture.

This year, electric utilities are expected to order over 25,000 megawatts of nuclear generating capacity, which will represent about fifty percent of all new capacity. Most observers predict that 1972 will be an equally good year.

These predictions tend to confirm the widespread belief that nuclear power will play a leading role in satisfying our nation's continually growing need for more electric power. And this is not surprising in view of the many advantages of nuclear power, as well as the many problems we are having with the various fossil fuels. Natural gas reserves are declining; low sulphur oils are expensive and limited in supply. Coal is plentiful but creates difficult air pollution problems. Work is now underway to develop commercial processes for converting coal to gas, but that is several years off.

Nuclear power has none of these disadvantages. It is plentiful; it is safe; it does not cause air pollution. Moreover, the price of nuclear fuel is expected to remain stable over the long term. This is in sharp contrast to escalating fossil fuel prices.

But in spite of all the advantages of nuclear power-in terms of cost, safety and freedom from air pollution-problems have arisen that are slowing down and otherwise affecting the orderly growth of nuclear power, and I would like to address the major portion of my remarks this morning to the most serious of these problems the delays in licensing caused by conflicting bureaucratic agencies and procedures, unclear guidelines, overlapping authorities, as well as by the somewhat related problem of intervenor lawsuits. The end result is that it takes much too long to secure approvals for construction and operation of an electric power plant.

One of the more obvious consequences are the electric power shortages in some areas. Less well known is the cost in dollars and cents that we are paying in plants now operating or under construction. It is a cost that ultimately gets passed on to all of us as consumers. On an individual plant basis, the costs amount to $2-$4 million a month for carrying charges depending upon the size of the unit and whether interest during construction and additional escalation are included. The figures relating to individual plants are significant in themselves, but when the total cost to the entire industry is estimated, the results are staggering.

Before I present total cost figures, let me first summarize the key assumptions underlying the cost estimates.

1. All nuclear plants in service or on order at the end of last year representing about 91,000 megawatts have or will be delayed one year beyond the originally scheduled date. The one year obviously is an average with some plants coming in with a minimum delay and others being delayed well over one year.

2. The average unit nuclear plant cost is $250 per kilowatt. 3. The average fixed charge rate is 15 percent.

4. The incremental energy cost penalty averages 3 mills per kilowatt hour because of the older less efficient equipment that must be used.

5. As a result of delays in nuclear plant schedules, an additional 30,000 megawatts of fossil boiler and gas turbine capacity was purchased at an average unit cost of $200 per kilowatt. The unit value allows for additional transmission facilities.

6. The nuclear capacity delayed would have operated at an average load factor equivalent to 7,000 hours per year full load. Based on these assumptions:

The total carrying charge on the nuclear plant investment corresponding to a one year delay works out to $3 billion.

The incremental increase in the cost or replacement power generated with less efficient equipment is almost $2 billion.

The substitute bloc of fossil and gas turbine capacity represents a commitment of $6 billion by the utility industry at least one year earlier than would have been the case if nuclear schedules had been maintained. This is equivalent to an additional carrying charge of almost $1 billion for the year in question.

In summary, it is estimated, based on a one year average delay in nuclear plant schedules, that the total cost to the utility industry will amount to $5-$6 billion.

Regardless of the exact figure, the magnitude is overwhelming, especially when compared to the total 1970 capital expenditures by electric utilities of $12.5 billion-bearing in mind that this covers generating facilities, transmission systems and distribution networks. In addition, new plant delays have, in turn, caused other problems some of which are:

Utility financing problems have been aggravated.

The need for rate increases to the consuming public has rapidly accelerated.

Money has been diverted that could have been spent on the fast breeder development and as a result, the U.S. technological position in the terms of international breeder technology has fallen behind.

Manufacturers work schedules have been disrupted.

Plans for expanding uranium supply have been upset.

Valuable operating experience with newer plants has been delayed.

It is impossible for a utility to anticipate the magnitude of the delay problem as it applies to any particular plant. At first glance, one solution might be for the utility to make provisions for extensive delays in its scheduling and place contracts well in advance. The power industry has been resorting to just this approach in an effort to compensate for delay problems. Lead times for initial commitment to

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commercial operation have increased dramatically over the past several years.

To ascertain how far lead times are being stretched, we reviewed the planned operating schedules for twenty-seven plants that have been or will be ordered this year. The average lead time for these plants is 72 years, but approximately one-third of the plants are scheduled for 81⁄2 years and a few approach 10 years. Moreover, the average lead time for plants ordered this year will be one year longer than those ordered in 1970.

I do not, however, suggest that this constant lengthening of lead time represents a real solution. It is, at best, an expedient which does not eliminate or even address itself to the cause of the problem. Even with these extended lead times, there is no assurance that plants will begin operating as scheduled. The evidence over the past few years, in fact, indicates that the exact opposite is true and that regulatory delays are compounding at a faster rate than the scheduled lead time

extensions.

Furthermore, the need for firm commitments so far in advance is inherently undesirable and generates more risks because of the uncertainties introduced by the longer time scale. The opportunity to take advantage of advancements in nuclear technology perfected during the intervening periods greatly diminished. Finally, the differential in lead time required for nuclear installations as compared to in lead time requred for nuclear nstallations as compared to alternate alternate types of generating capacity has been widening. Average lead time for fossil steam plants, for example, is approximately 412 years or. three years less than in the nuclear case. Such a difference further complicates the difficulties inherent in planning power system growth. This, in short, is the price we are all paying for delays in plant licensing and operation; caused as I have said, by inefficient licensing procedures.

Unless positive action is taken now, regulatory delays will become even more acute, and it is not inconceivable that the entire regulatory system could ultimately collapse under its own weight.

We have had other types of delays in the past, but we solved those problems and I feel quite confident that if we put our minds to it we can develop simple, workable licensing procedures.

The solution, as I see it, lies in the legislative area, for the problem can only be resolved through a complete restructuring of the proce dures for licensing nuclear plants. I would like to make four recommendations this morning along this line:

First: New Federal legislation should be enacted which will eliminate the conflicts that now exist and the layers of overlapping jurisdiction in various agencies. To illustrate the complexity of the problem, there are twenty-five Federal agencies that have jurisdiction in some way relating to the approval procedures currently required for nuclear plants.

The lack of clean cut and well understood responsibilities between agencies leads to further complications. The recent court decision clarifying the AEC's responsibilities under NEPA legislation will undoubtedly cause further delays, and exemplifies the confusion that exists. A mechanism is necessary which will

provide for firm, clear decisions on a predictable schedule for both construction permits and operating licenses. It should also clearly define the role of state and local agencies in the regulatory

process.

Second: At the state level, there is an urgent need for closer coordination among the various agencies involved. In Connecticut, where I live, there are twenty such state agencies concerned with radiation, thermal effects and other environmental considerations. Numbers alone do not tell the story, however, since, in many cases, it is not possible to determine which agency actually has jurisdiction. A procedure that consolidates the decision-making process in a single agency.. in short, a "one-stop" review and approval system is a vital necessity.

Third: Existing legislation provides for public hearings both at the time a construction permit is being considered and again several years later when the time has come for issuance of the operating license. There is certainly a legitimate role for public participation in the review process in view of everyone's vested interest in the preservation of our national environment. However, under present regulations, it is possible for intervenors to request hearings at any time during this period and frequently reopen issues that have already been decided. There is a proper time to raise issues and that is at the very beginning. It is dis-. ruptive to industry and unfair to the public if issues are raised just when the plant is ready to operate. This matter can only be solved by new legislation. The entire hearing process must be reexamined and a determination made regarding the appropriate role of the public hearing process.

Fourth: In looking ahead, it is quite obvious that the work of the AEC regulatory staff will increase exponentially. The large number of operating license applications for plants ordered previously plus applications for new plants easily demonstrate the point. Furthermore, the AEC estimates that operating license reviews typically require about 40 percent more manpower than a construction permit application. The increasing amount of time spent by the AEC's technical staff in connection with public hearings and the Commission's enlarged responsibilities in environmental and antitrust matters will only add to the burden.

Various AEC spokesmen have repeatedly referred to their continuing problem of not having sufficient staff to handle the application review load. This condition has existed for a number of years. It is incredible that simple understaffing should be a reason to continually delay nuclear plants when the cost of delays has reached such staggering proportions. If a cost/benefit analysis had been performed earlier in this area, the problem would not be an issue today.

In closing, the problems I have outlined this morning are real and of a serious nature, but I am confident they will be solved. Ours is a major new energy source and in developing it one must expect some growing pains.

But just as we have solved the problems of on-time delivery, we expect to resolve our current licensing and procedural difficulties. The future lies with nuclear power.