to competing demands for funds. It is recognized that the economic evaluation and potential for specific shipboard applications will be dependent not only on the nuclear plant characteristics but on the improvements in ship design, cargo handling, operating procedures, and other non-nuclear items which come under the cognizance of the Department of Commerce. 16. Relationship of the Reactor Plant Development Program to a Shipbuilding Program. The basic objective in proceeding with an AEC civilian maritime reactor plant program is to facilitate the introduction of safe, reliable and competitive nuclear power plants to merchant ships. The AEC's Civilian Maritime Nuclear Propulsion Program plan seeks to achieve this objective through continued technical progress. 17. In summary, the Government and industrial participants in any civilian maritime nuclear propulsion program have a choice of the following options or combinations thereof, but not necessarily all, depending on the policies, relative priorities, and availability of funds: a. Proceed with a nuclear shipbuilding program immediately where current pressurized water technology is adequate. Leadership by shipowners-nuclear industry-Department of Commerce b. Proceed with a ship prototype where reactor technology is adequate for a first step only but where operational experience is needed. Leadership by shipowners-nuclear industry-Department of Commerce Support by AEC c. Proceed with a research and development program, where major technological and economical advances are necessary and possibly build a landbased test facility after significant advances have been made. Leadership by AEC-nuclear industry Support by Department of Commerce-Shipowners d. Proceed with the research and development program, probably including the construction of a land-based test facility, where current technology must be advanced to achieve the required performance, reliability, economy and safety. Leadership by AEC-nuclear industry Support by Department of Commerce-Shipowners 18. Funding. The funding for the R&D program in FY 1966 and FY 1967 is $0.5 million/year. The following projections represent a logical follow-on five year program to conduct research and development and construct the test facility that can be started in any subsequent year, if the determination is made that the program is justifiable. 1 The unknown nature of a cooperative program makes any estimate of funding uncertain at this time. It is expected that funds required by the AEC for reactor plants for the shipbuilding program will be included in the authorization and appropriations sponsored by the Department of Commerce. Mr. SHAW. In addition, we have worked with the Maritime Administration in connection with a request from Senator Magnuson. This report has not yet been cleared through the appropriate parties, and I do not think this report can be made available right now. The CHAIRMAN. You say that report has not been cleared? Mr. SHAW. Yes, sir. This report was requested by Senator Magnuson last year. It has not been made available yet. I am sure once that report is released, it can be made available to this committee. The CHAIRMAN. Several members have questions. I have one further question. This is on page 248. You indicate you would not recommend an R. & D. program if the construction effort were to be limited to three ships. Is this fully understood by all concerned in this nuclear ship program? Mr. SHAW. I am sorry, sir. I missed the last part of the question. The CHAIRMAN. On line 21 of page 248, you indicate that you would not recommend an R. &. D. program if the construction effort were to be limited to three ships. Is this fully understood by all concerned in this nuclear ship program? Mr. SHAW. I cannot answer that, sir, because, as I understand it, the negotiations between the reactor manufacturers and the shipbuilders and others involved here have been related to what is classified as commercially available reactor plants. This implies that the AEC would not be involved in any of the R. & D. It certainly has been made clear by some of the manufacturers that have talked to us that their designs are dependent upon an R. & D. program. But the purchaser has the privilege of accepting this as part of his cost with the procurement of the plant, or of hoping that some arrangement can be made for someone else to pick up the research and development. I am not sure whether the various purchasers who are talking about using these plants recognize this point. I think this is one of the questions that relates to what the real price of these plants is going to be if people purchase them. The point I was trying to make before is that there is little justification for an R. & D. program of $100 million if one is only going to be building three ships. I believe in that case I would rather invest the dollars in building ships than in an R. & D. program. The CHAIRMAN. Mr. Stubblefield. Mr. STUBBLEFIELD. I have no questions. The CHAIRMAN. Mr. Grover. Mr. GROVER. I have just one question, Mr. Shaw. Last time you appeared before us, I think the question was put to you about possible conversion of the Savannah. Of course, the Savannah is a prime target of these hearings, although I think the committee is very fortunate to have your testimony here because you probably are one of the most knowledgeable people in this area that we have in government, and you are demonstrating it in your testimony. Last week in colloquy with, I believe, Mr. Mailliard and in response to his question about how long it would take to convert the Savannah to a containership, you said that you thought it might lay it up for 5 years if you are talking about pulling out the nuclear plant and putting in another plant. Then Mr. Mailliard addressed the question to Mr. McMullen and said how long would the Savannah be laid up if we are going to convert it to a containership, and Mr. McMullen said actually the layup time would be somewhere in the region of 9 to 10 months at most in the type of program that he would envision. The inconsistency of 5 years and these 9 or 10 months, is the explanation for the probability or possibility that Mr. McMullen did not envision disturbing the area in which the reactor is located? Mr. SHAW. From my reading of Mr. McMullen's statement, Mr. McMullen, I think, indicated fairly clearly that in modifying the Savannah he would not recommend changing the propulsion plant. I believe we are pretty much in agreement with respect to the cost and time associated with such an approach. I felt that it was important to recognize that there are a number of suggestions about what to do with the Savannah, one of which is to upgrade its propulsion plant and put in a modern reactor plant. I was speaking to that point when I indicated a layup of as much as 5 years might be required. To shorten that time, one could operate the Savannah say for 2 or 3 years, while the new equipment is being procured. This would minimize the time she would be laid up in order to change the propulsion plant. My own personal experience on major modifications of ships, such as I think would be involved in such a propulsion plant change, is that the predictability of such events is very uncertain. Once these ships get into the shipyard and you go into the bowels of the ship, you do encounter problems. This is a hard way to get a new propulsion plant to sea, and I think in this sense Mr. McMullen and I probably agree. I think Mr. McMullen's point with respect to modifying the hull is a much simpler modification. This is done in shipbuilding very frequently. Where you jumboize, and build a section ahead of time, you need not take the ship off the line to get ready to do that. Although there is the alternative way to take the ship into the shipyard and pay the leadtime. There are a number of alternatives here, and I do not think our statements are inconsistent at all. I think they are quite mutual, depend on the assumptions. Mr. GROVER. In my prefacing remarks, I assumed that disturbing the compartment where the propulsion equipment is located was the difference between your two estimates. I gather, though, that you wouldn't be prepared, and I wouldn't expect you to be prepared, to talk cost estimates with respect to jumboizing or conversion. It is not in your field, so that I won't address any questions to that. The is all. The CHAIRMAN. Mr. Murphy. Mr. MURPHY. Mr. Chairman, I have quite a few questions and would be happy to yield to my other colleagues if they will not take as much time as I will. The CHAIRMAN. Mr. Morton? Mr. MORTON. I have just one question. Referring to the figures you showed us on the chart, are the operating costs proportional to capital costs as we get into larger plants? Mr. SHAW. I am sorry, sir. I should have clarified that point. My chart shows only capital costs; operating costs are not shown. In general, though, there is a slighter variation in operating costs. Such things as the safety review, number of operators, and things like that do not vary significantly with plant size, whereas fuel burned would be a function of plant size. On a dollar per kilowatt basis you would get a significant reduction. For example, to remove fuel from a small plant involves almost the same problems as removing fuel from a large plant. So the operating costs are significantly flatter than the capital costs on that chart. I have an overlay to that chart which will show another important factor. The gray strip shows the capital costs of fossil-fired plants. (See chart 8.) So, basically, people interested in overall plant economies are really looking at capital costs between large nuclear and fossil-fired plants being almost the same. It is very apparent that lower nuclear operating costs compensate for any differences and nuclear plants have become very attractive to the utilities. Mr. MORTON. That is the point I was getting at. Mr. SHAW. Yes, sir, and as one projects to the left on the chart, it is quite apparent that the differential between capital costs of the two plant types imposes upon the operation and maintenance costs a more severe burden to compensate for the differential costs. Therefore because of the larger differential costs here, small commercial plants are not attractive at this time. Mr. MORTON. Thank you very much. I thank the gentleman. The CHAIRMAN. Mr. Edwards. Mr. EDWARDS. No questions, except to say that I am sorry that I had other hearings and have not heard this witness. The CHAIRMAN. Mr. Murphy? Mr. MURPHY. Mr. Shaw, relating to this chart again, these are examples of capital cost transfer aboard nuclear plants. I take it these are power generating plants? Mr. SHAW. Yes, sir. Mr. MURPHY. There are about 30 or 35 examples on there. How many total light water nuclear power generating plants do we have in the country? Mr. SHAW. In operation today, sir? Mr. MURPHY. Yes. Mr. SHAW. We have 13 commercial plants which are operating today in this country. In addition to the 13, 48 are either being built or are firmly committed. Mr. MURPHY. This certainly shows a cost reduction in capital costs from the beginning of the program to the present time. Mr. SHAW. Yes; very much, sir. Mr. MURPHY. How many maritime nuclear plants do we have? Mr. MURPHY. No, just maritime plants. Mr. SHAW. One, sir; the Savannah. Mr. MURPHY. Therefore, it would be rather difficult to show a trend in cost reduction in a maritime plant with only one example, wouldn't it? Mr. SHAW. Very difficult, sir. I think even more basic than that, as obvious here, is a fair uncertainty as to what the plant costs are compared to the pricing information that is shown here. This is pricing information on these charts, not cost. There is a distinction here because it is quite evident that certain organizations may be willing to price something out at a deficit if they want to buy into the business. It is certainly obvious that in some of these plants all the costing information may not be available to us so that when we quote costs like this Mr. MURPHY. But it would be obvious that if there was only one plant with no experience and no program that you couldn't even enter into a discussion validly on cost reduction or economy or what the future would portend for a maritime nuclear plant. Mr. SHAW. No, sir. In a sense, the fact that one example is the only factual information which one has available has to be put on the table in that context. It certainly is obvious that the reactor industry is building lots of pumps, reactor vessels, fuel, steam generators, and other such components. Cost information is available on those types components which can be used to make estimates from these examples. Mr. MURPHY. How many meetings have been held between the Atomic Energy Commission and MarAd members of the joint liaison committee since the fiscal year 1967 authorization hearings of the Joint Committee on Atomic Energy in March 1966 ? Mr. SHAW. I believe one or two, sir, in 1967. Dr. KAVANAGH. He said March of 1966. Mr. MURPHY. These are meetings, not just telephone calls. Dr. KAVANAGH. Let me try to answer that. The committee agreed last year that since the same people who represented the committee were working together on the report which Mr. Shaw referred to as not yet having been agreed to completely, we would consider meetings of that group to represent the liaison meetings. We had many meetings during the spring and early summer of 1966 in that connection. I don't know exactly how many. I could go back to the records and see. Mr. MURPHY. These are between the parties? Dr. KAVANAGH. Yes, sir. After we reached a point where we had made a draft report, we stopped meeting until we saw what happened to that report. There was a long period in the late summer and fall of 1966 when we did not meet. We have had a meeting this year. We expect to have another one within in few weeks. But in the period you refer to, from the author |