[Copy of a telegram sent to Pacific Northwest private utility companies on July 12, 1962]

Yesterday at the hearing before the Joint Committee on Atomic Energy, Chairman Holifield requested that I make inquiry of the private utilities of the Northwest as to their interest in participating in the proposed exchange arrangements described by BPA Administrator Luce before committees of Congress on the basis of a statute which would specify that 50 percent of the project output be made available to the private utility companies of the Northwest or on the basis of a WPPSS policy which would reserve the same amount to them. I was requested to report the results of this inquiry to the JCAE by 3 p.m. e.s.t. today. Please direct response to me at the Claridge Hotel, Washington, D.C.

WASHINGTON PUBLIC POWER SUPPLY SYSTEM,
OWEN W. HURD, Managing Director.

KENNEWICK, WASH.

IDAHO POWER Co.,

T. E. ROACH, President.

BOISE, IDAHO.

U.S. ATOMIC ENERGY COMMISSION,
Washington D.C., July 13, 1962.

DEAR MR. HOLIFIELD: We understand that a question has been raised concerning the intent of the italicized clause in the sentence quoted below from the proposed contract between the Commission and the Washington Public Power Supply System (WPPSS):

ARTICLE 12. Compensation for Commission Costs

c. Before the Commission shall be obligated to incur any expense for which compensation by the Supply System is provided for herein, the Supply System shall, except as otherwise expressly provided for herein, advance an amount equal to the Commission's estimate of such costs.

The italicized clause was inadvertently retained from an earlier draft of the proposed contract. In the earlier draft it was contemplated that the Commission might undertake certain activities involving costs for which the Commission would be fully reimbursed upon completion of such activity rather than require an advance of

funds. However, the parties have agreed that all such activities, and others as provided in the contract, will be performed with funds. advanced by WPPSS.

Accordingly this clause is being deleted from the contract.

Sincerely yours,

A. R. LUEDECKE, General Manager.

AMENDMENT TO H.R. 11974 ADOPTED BY THE JOINT COMMITTEE ON ATOMIC ENERGY ON JULY 12, 1962

On page 15, after line 5, add the following new section:

"SEC. 112. The Commission is authorized to enter into arrangements with non-Federal entities in accordance with the basis for arrangements described in Program Justification Data No. 63-1000, for the construction and operation of electric energy generating and transmission facilities at the Hanford New Production Reactor and under any such arrangements energy produced shall be delivered and disposed of in accordance with the basis for arrangements described in said Program Justification Data No. 63-1000: Provided, That all expenses of modifications of the Hanford New Production Reactor made at the request of the non-Federal entities, and all expenses of constructing and operating such electric energy generating and transmission facilities shall be borne by the non-Federal entities.

FURTHER AMENDMENT OF AMENDMENT TO H.R. 11974 ADOPTED BY JOINT COMMITTEE ON ATOMIC ENERGY ON JULY 12, 1962

: Provided further, That the Commission shall notconc lude any contract for the sale of steam to a non-Federal entity unless the Commission determines that such entity has first offered 50 per centum participation in the arrangements described in Program Justification Data No. 63-1000 to privately owned organizations on a nondiscriminatory basis: And provided further, That no Federal agency may acquire the generating facilities from the non-Federal entity without prior congressional authorization and in the event of such authorization the generating facilities shall be acquired subject to contracts then in existence for disposition of the electrical energy produced by the facilities.

PROGRAM JUSTIFICATION DATA FOR NPR ELECTRIC PLANT AS REVISED BY THE JOINT COMMITTEE ON JULY 12, 1962

PROJECT JUSTIFICATION DATA NO. 63-1000-PHASE I

A. Parties

The Atomic Energy Commission and the Washington Public Power Supply System (WPPSS), Kennewick, Wash., a municipal corporation, joint operating agency, and publicly owned utility organized under the laws of the State of Washington, and composed of 16 public utility districts.

B. Description of Proposed Arrangement

(1) Objective. The objective of this proposed arrangement is to sell to WPPSS excess steam energy produced in the course of operating the NPR, for the production, in generating facilities constructed and operated by WPPSS, of large quantities of power, 800,000 kilowatts rated capacity. The Commission, through the sales of such excess

steam energy, would recover appreciable sums of money, thus reducing the cost of plutonium to be produced in the NPR. Furthermore, programmatic objectives of the Commission would be accomplished through contribution to the Nation's nuclear power development program. The arrangements for distributing the power generated by WPPSS are outlined in Phase II. During periods when the Commission is not operating the NPR for its own purposes, the NPR would be leased to WPPSS to permit its continued operation for steam production. Such a lease arrangement would assist in shortening the period required to resume production activities and lower standby costs should national defense interests require such resump

tion.

(2) Location.-Hanford, Wash.

C. General Features of Proposed Arrangement

(1) Land lease.-The Commission will make available approximately 13 acres of land on which WPPSS will construct necessary facilities to permit generation of power. Under the lease, WPPSS will be limited in its use of the land to the purposes set forth therein; namely, to construct and operate generating facilities. WPPSS will have rights of ingress and egress as well as certain easements for transmission lines and supporting structures. The Commission will have the right to terminate the lease with reasonable notice if the land is misused or disused, or if WPPSS becomes insolvent. If the lease is terminated prior to expiration, the Government may elect to acquire the facilities, in which case it will be required to assume the outstanding indebtedness of WPPSS under the bonds issued for this project. The Government will have an option to take title to the generating facilities, without cost, upon expiration of the lease. WPPSS will pay the Commission rent charges of $1,000 for the first year and $10 per year thereafter. The expiration date of the lease will be the same as that of the contract. (See 13 below.)

(2) Construction of Generating Facilities.-WPPSS will construct, at its expense, the necessary generating facilities.

(3) Modifications in NPR.-The Commission agrees to make certain modifications in the NPR which are requested by WPPSS and which are acceptable to the Commission, to be paid for by WPPSS, to improve the quality and dependability of the steam for the generation of electric power.

(4) Delivery of steam energy. Upon completion of the generating facilities and during periods when the Commission is operating the NPR, the Commission will, consistent with the safe, efficient, and effective operation of the NPR, make available to WPPSS all steam energy in excess of the needs of the Commission produced incident to the operation of the NPR.

(5) Commission review of designs, plans, and specifications relating to generating plant.-The Commission will have the right to review all designs, plans, and specifications relating to construction and modifications of the generating facilities and approve any features which the Commission determines could affect the safe and effective operation of the NPR or of other plants and facilities of the Commission.

(6) Commission inspection rights.-The Commission will have the right to inspect at all reasonable times the construction of the generating facilities and the operation of those facilities, during both the dual-purpose and power-only phases, to assure that the safety, efficiency, and effectiveness of the NPR and other Commission facilities is not impaired. The Commission will have comparable inspection rights concerning the NPR during the power-only phase. In addition, the Commission, as a consequence of inspection, during both the dualpurpose and power-only periods, may require WPPSS to undertake certain programs in order to assure the safety, efficiency, and effectiveness of the NPR and other Commission plants and facilities.

(7) Commission direction of operations during emergencies.-During any period in which the Commission determines that an emergency exists relating to the safety and effectiveness of the NPR, the Commission may direct all actions and operations involving the generating facilities, and involving the NPR during periods when it is leased to WPPSS, until the emergency is terminated.

(8) Transition to power-only operation. At times when the Commission gives notice to WPPSS that dual-purpose operation is to be suspended, WPPSS will take necessary steps to satisfy any licensing requirements which may be a condition precedent to its operation of the NPR and will undertake any necessary modifications in the generating facilities necessary to accommodate power-only operation. The Commission at the same time agrees to undertake necessary modifications of the NPR which are acceptable to the Commission, to be paid for by WPPSS. The Commission will then tender to WPPSS the NPR under a lease agreement described in paragraph (9) below.

(9) NPR lease.-Under the terms of the lease, WPPSS will be required to use the NPR solely for the production of steam energy to operate the generating facilities. WPPSS will comply with the provisions of the basic contract pertaining to use, maintenance, and operation of the NPR. The Commission will have the right to terminate the lease if the NPR is not used in the manner provided for in the lease and in the basic contract. WPPSS will pay the Commission rent charges of $1,000 for the first year and $10 per year thereafter. The expiration date of the lease will be the same as that of the contract. (See (13) below.)

(10) Recapture of NPR by Commission.-The Commission will have the right, at all times when the WPPSS is operating the NPR, to recapture the NPR for production or other purposes.

(11) Compensation to Commission for costs of activities undertaken by Commission.-The Commission will be compensated in advance for all costs associated with modifications of the NPR and construction and operation of the generating facilities in connection with this arrangement which the Commission would not have had if it had not entered into the arrangement. At no time will the Commission be required to expend its own funds. Those costs which result from activities which the Commission agrees to undertake shall be paid for from funds advanced to the Commission by WPPSS.

(12) Charges for steam energy.-WPPSS will pay to the Commission. fixed charges for steam during all periods of dual-purpose operation. Fixed payments will be made irrespective of the quantity or quality

of steam energy delivered or available, in accordance with the following schedule:

(13) Term and termination. The duration of the contract shall be from its execution until the revenue bonds issued by WPPSS have been paid or retired and shall continue thereafter so long as WPPSS continues to own and operate the generating facilities. The contract may be terminated by the Commission in the event the land lease or the NPR lease is terminated by the Commission.

(14) Miscellaneous provisions. Certain additional miscellaneous provisions are also contained, such as the Commission's agreement

to

(a) Make available without charge previously prepared studies, designs, plans, etc., which are necessary for the design, construction, and operation of the generating facilities.

(b) Provide certain supplies and services to the extent that the Commission determines that they are available, at the expense of WPPSS.

(c) Conduct certain technical studies concerning the relationship of the NPR to the generating facilities and vice versa, at the expense of WPPSS.

(d) To the extent and under the same terms and conditions that the Commission would provide comparable materials and services to other licensees, make available special nuclear material for fuel and perform fuel-cycle services for power-only operation.

(e) The contract has other provisions relating to government property, patents, security, availability of information and reports, and various standard clauses required in all contracts to which an agency of the United States is a party.

PROGRAM JUSTIFICATION DATA 63-1000-PHASE II

A. Names of Contractors

Trilateral contracts among the Bonneville Power Administration (BPA), the Washington Public Power Supply System (WPPSS), and individual participants (currently public utility districts in the State of Washington but may include other publicly, cooperatively, or or privately owned utilities or industrial firms in Bonneville marketing area).