DEPARTMENT OF ISE INTERI PROPOSED AMENDMENT TO ATOMIC ENERGY COMMISSION'S FISCAL YEAR 1967 AUTHORIZATION ACT PERTAINING TO NUCLEAR POWER-DESALTING FACILITY SEPTEMBER 28, 1966.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed : Mr. HOLIFIELD, from the Joint Committee on Atomic Energy, submitted the following REPORT [To accompany H.R. 17558] The Joint Committee on Atomic Energy, having considered H.R. 17558, a bill to amend Public Law 89-428, the Atomic Energy Commission's fiscal year 1967 authorization act, to authorize the AEC to enter into a cooperative arrangement for a large-scale, combination, nuclear power-desalting project, and appropriations therefor, in accordance with section 261 of the Atomic Energy Act of 1954, as amended, reports favorably thereon without amendment and recommends that the bill do pass. SUMMARY OF THE BILL The bill would amend the AEC's fiscal year 1967 authorization act to authorize the AEC to enter into a cooperative arrangement, in association with the Department of the Interior, with the Metropolitan Water District of Southern California, or others. The AEC would be authorized to participate in a large-scale, nuclear power-desalting project involving the development, design, construction, and operation of a desalting plant, back-pressure turbine, and nuclear powerplants which would also be utilized for the generation of electric energy. The AEC's assistance, which would not exceed $15 million, would not duplicate any assistance that might be made available by the Department of the Interior and would pertain to the dual-purpose aspects of the project; the siting and related design of the plants; and the coupling of the desalting plant with the back-pressure turbine and the nuclear powerplants; or to other aspects of the project pertaining to the interrelationship of nuclear power and desalting. LEGISLATIVE HISTORY Public Law 89-428, the AEC's fiscal year 1967 authorization act, approved May 21, 1966, authorized appropriations for the AEC as follows: Operating expenses- Plant and capital equipment.. Total authorization____ $1, 964, 128, 000 295, 830, 000 2,259, 958, 000 On September 12, 1966, the Atomic Energy Commission transmitted to Congress a proposed bill to add a new section 108 to Public Law 89-428, to authorize a large-scale combination nuclear powerdesalting project. New section 108 would authorize appropriations in the amount of $15 million for the AEC's participation in this project. This bill was introduced respectively by Chairman Holifield, by request, and Vice Chairman Pastore, by request, as H.R. 17558 and S. 3807. Hearings on these bills were held before the Joint Committee on Atomic Energy as summarized in the next section of this report. The full Joint Committee met in an executive session on September 28, 1966, to consider these bills. After full discussion the committee voted without dissent to report these bills favorably without amendment, and to adopt this committee report. In this connection, the Department of the Interior on September 12, 1966, submitted a separate request for congressional authorization of its participation in this project. Bills to provide such authorization were introduced in the Senate (S. 3823) on September 13, 1966, and the House of Representatives (H.R. 17676 and H.R. 17709) on September 13 and 14, 1966. S. 3823 was favorably reported by the Committee on Interior and Insular Affairs on September 20, 1966, and was passed by the Senate on September 21, 1966. HEARINGS The Joint Committee on Atomic Energy held hearings on H.R. 17558 and S. 3807 on September 14, 1966. Witnesses appearing before the committee are listed below in the order of their appearance. Hon. Richard T. Hanna, a Representative in Congress, from the State of California. For the Atomic Energy Commission: James T. Ramey, Commissioner. John P. Abbadessa, Controller. Milton Shaw, Director, Division of Reactor Development and Technology. For the Department of the Interior: Frank DiLuzio, Assistant For the Metropolitan Water District of Southern California: E. W. Rockwell, principal electrical engineer. William R. Gould, vice president, Southern California Edison Co. Carthrae M. Laffoon, vice president, San Diego Gas & Electric Co. Samuel Nelson, general manager and chief engineer, Los Angeles Department of Water and Power. Brice O'Brien, general counsel, National Coal Association. COMMITTEE COMMENTS A. BACKGRound of prOJECT The AEC has been engaged for a number of years in a program of developing nuclear energy for application to large-scale desalting of sea water. This program has been carried out in close cooperation with the Department of the Interior's Office of Saline Water (OSW) which has the responsibility for developing practicable low-cost means of producing from sea water or from other saline waters, water of a quality suitable for municipal, industrial, agricultural, and other beneficial uses. In furtherance of their respective programs, the AEC and the OSW executed an agreement in August 1964 with the Metropolitan Water District of Southern California (MWD) providing for an economic and engineering feasibility study of a dual-purpose electric power generating and sea water desalting facility employing nuclear energy. MWD is a public corporation which presently supplies water for domestic, industrial, and other uses to about 26 water districts or authorities in 6 southern California counties. In furtherance of this study, MWD, with the Government's concurrence, subcontracted to the Bechtel Corp. the task of determining the technical and related aspects bearing on the engineering and economic feasibility of a combined nuclear power and desalting facility in the size range of 50 to 150 million gallons of water per day and producing substantial megawatts of electric power. In the spring of 1965, the Department of Water and Power of the City of Los Angeles, Southern California Edison Co., and San Diego Gas & Electric Co. expressed interest in participating in a dual purpose project should favorable findings result from the Bechtel study. These utilities offered to furnish, own, and operate the nuclear power plants which, in addition to supplying the power needs of the utilities, would have sufficient capacity to meet the energy demands of the desalting plant. The Bechtel study was modified to incorporate an evaluation of the technical and economic implications of the utilities' proposal. The Bechtel study report, in December 1965, concluded, among other things: 1. That a combination nuclear power and desalting complex capable of producing 150 million gallons per day of desalted water, and about 1,600 megawatts (net) of electric power, was technically feasible and could be built to be ready for operation in 1971. 2. That the offer of the electric utilities to participate could. result in the lowest cost for the production of water and power, and would minimize capital investment by the MWD. 3. That a manmade island, located offshore from the Bolsa Chica State Beach south of Los Angeles and Long Beach and connected to the mainland by a 2,800-foot causeway, or an onshore site, would be technically feasible, and that the island site would appear to be most attractive economically. 4. That the estimated cost of producing desalted water at the island location was 21.9 cents per thousand gallons ($71 per acrefoot) and the estimated cost of water delivered to the MWD system at its Robert B. Diemer filtration plant was about 27 cents per 1,000 gallons ($88 per acre-foot). 5. That the Diemer filtration plant near Yorba Linda, Calif., was the logical point where the 150 million gallons of water per day could be blended into the MWD's system. In the latter part of 1965, representatives of the OSW, the AEC, the MWD, Southern California Edison, San Diego Gas & Electric, and the Department of Water and Power of the City of Los Angeles worked as a group to explore the practicality and desirability of the joint participation by these entities in a cooperative project for the development, construction, and operation of a dual-purpose nuclear powerdesalting complex, within the general framework of the findings and conclusions of the Bechtel study. In essence, the joint group reported that a cooperative arrangement for the development, construction, and operation of a large dualpurpose nuclear power and saline water conversion facility would be mutually advantageous to the MWD, the electric utilities, the Dartment of the Interior, and the AEC. The views of this group were substantially shared by management of the firms and agencies involved, and were incorporated in a task force report dated December 9, 1965. Discussions in the framework of the task force report continued and resulted, as of August 19, 1966, in a memorandum of understanding between the Government, represented by the OSW and AEC, and the Metropolitan Water District. This memorandum of understanding and program justification data were submitted by the AEC in support of the AEC's authorization request as contained in H.R. 17558 and S. 3807. B. PRINCIPAL FEATURES OF PROPOSED COOPERATIVE ARRANGEMENT As outlined in the memorandum of understanding, the following are the principal features of the contemplated cooperative arrangement. 1. The parties will proceed to develop, design, build, and operate a large-scale, dual-purpose, nuclear-fueled electric power and desalting complex, generally as described in the Bechtel report. 2. The construction of the evaporator portion of the desalting plant will be in two phases-the first phase will be a 50-milliongallon-per-day plant-the second phase will expand the desalting portion of the project to a total capacity of 150 million gallons a day. Proceeding to the second phase will be subject to the mutual consent of MWD and the Government. It is expected that the first phase of the project will include two nuclear steam supply systems furnishing steam to two condensing turbines and a back-pressure turbine. 3. The MWD will be the prime contractor under the Government contract. It will enter into implementing agreements with the participating electric utilities; these agreements will be submitted for Government review and concurrence from the standpoint of their effectuation of and consistency with the provisions of the prime contract. These subsidiary agreements may not be modified so as to affect the interest of the Government under or in connection with the prime contract without the Government's prior approval. 4. The project complex will be located on a suitable site. It is presently expected that the site will be a manmade island located offshore of the Orange County coast south of Los Angeles, Calif. This site would consist of about 45 acres of usable surface area and would be connected to the mainland by a surface causeway. 5. The Government will not own the plants or the site. Ownership will be in the MWD and the electric utilities. 6. The Office of Saline Water will make a maximum total contribution of $57.2 million to the cost of building and of operating and maintaining the desalting plant and related equipment; $45.7 million of this total is planned for capital contribution, and up to $11.5 million in support of the cost of operating and maintaining the desalting plant and related equipment. Of the $45.7 million for capital contribution, $35.7 million will relate to the first phase of the project. 7. AEC's monetary support will not exceed $15 million-up to $13.5 million for phase I and $1.5 million for phase II of the project. As is customary with AEC in connection with its contracts, AEC's payments to the MWD will relate to the costs incurred by the district which are necessary or incident to the performance of the particular categories or scopes of activity identified in the contract for AEC support. It is expected that the AEC's support would pertain principally to two broad areas the siting of the complex and the coupling of the nuclear steam supply system and the turbine generators to the desalting plant. 8. The Government will have full rights to inspect, receive reports, and be informed. Other appropriate Government rights will be provided for in the definitive contract. These will include usual patent rights that OSW and AFC normally obtain. 9. The term of the contract will be based on an operating period of 4 years for the 50-million-gallon-per-day capacity first phase and an additional 3 years of operation of the total 150-milliongallon-per-day plant. If the bid price for the phase I desalting plant exceeds the estimate which the MWD and the Government mutually agree to by more than 15 percent, either party may terminate the project, and in such event the total cost incurred by the MWD up to that time would be shared equally by the district and the Government. Other termination provisions will be negotiated and included in the definitive contract. C. PRINCIPAL BENEFITS TO THE ATOMIC ENERGY PROGRAM TO BE DERIVED FROM PROPOSED COOPERATIVE ARRANGEMENT The committee has examined the data presented by the participants in this proposed cooperative arrangement, and has concluded that there is a sound basis for authorization of the AEC's support of the project. The proposed arrangement should provide important information, at a relatively low cost to the AEC, which will assist in the future exploitation of nuclear power for applications other than the generation of electricity. Thus, this project represents a logical continuation of the national effort to secure the full benefits of the peaceful atom. |