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2.

You also expressed concern in your testimony about the process laid out in Title XII, in particular the concern that federal participation in a construction project would divert funds from other valuable R&D. The authority in Title XII is intended to be in addition to and independent of ongoing R&D programs.

a.

Would your concerns about Title XII be diminished if it was clear that a demonstration project would not reduce the available funds for existing R&D programs?

Response:

Yes, my concerns about the timeliness of Title XII would be

diminished if it was made clear that no reduction of funding for existing

ALWR research and development programs would occur. Nevertheless, I

would still have some concern that any funding for a program under Title

XII would inevitably result in reduction of much needed funding for other

activities more likely to result in the re-emergence of the nuclear option since

we cannot help but be aware of the enormous budgetary constraints under

which the Congress must operate.

b.

Would you then support a demonstration such as envisioned in Title XII?

Response:

If no funding reduction occurs in the ALWR programs and if the

goals of Title XII were focused on advanced reactor design such as the

MHTGR, then Southern Nuclear would support such a demonstration

project.

C.

Why wouldn't it be attractive to a utility to participate in a demonstration project that received 50% federal funds?

Response:

The initial, and natural, reaction to a federal cost-sharing program

which provides 50% funding for an advanced reactor design demonstration

project is favorable. Regretfully, however, the experience of the industry in

the Clinch River project has left considerable concern about the viability of

such a partnership. At Southern Nuclear, we believe that with successful

completion of standardized design, NRC licensing reform and high-level waste

storage progress, the ALWR program will not need governmental

participation because of the wide acceptance this proven technology has

enjoyed in the nuclear power industry. It may be attractive for a utility to

participate in a demonstration project contemplated by Title XII, but to

determine the attractiveness of this participation, and to gauge the willingness

of a utility to invest in it, would require much more detailed evaluation of

the project.

d.

Similarly, why wouldn't it be attractive to a utility to participate in a project under Section 12005, the so-called institutional demonstration?

Response:

Problems of investment recovery through the ratemaking process,

financing and joint operational responsibility between a utility and the United

States Government discourage utility participation in the institutional

demonstration described in Section 12005. As we have noted earlier, we believe that the ALWR design is likely to be a better investment for base

load capacity than other competing options available to a utility. In my

opinion, the first several orders would be placed by groups of utilities that

share both the financial burden and the energy output from such a plant.

UTILITY PARTICIPATION IN A DEMONSTRATION PROJECT

3.

Last year, DOE offered to assist á utility to obtain a license as part of a demonstration project, but got no volunteers. Why was there so little interest among the utilities in this program?

Response:

I believe that this question refers to the earlier site certification

Request for Quotation that DOE promulgated last fall. There was a great

deal of interest among utilities for this program and, currently, several

utilities are undertaking to prepare a proposal that would be responsive to

a

DOE's request. The DOE site proposal appeared to include immediate

activity such as public hearings on proposed emergency plans at this early

time when a responding utility would not know whether, in fact, an ALWR

design would be available in 1995 or whether licensing reform would have

taken place, and, yet, all the public problems with siting a new facility would

be discussed prematurely and opposition generated well before the need for

power or the opportunity to proceed arose. Nevertheless, work is currently

underway on this effort to respond to the RFQ but would not involve

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committing a utility to a public announcement that it intends to order a new

nuclear plant.

FUTURE ORDERS OF NUCLEAR PLANTS

How much of the estimated 150 to 250 gigawatts of new electrical capacity needed over the next two decades do you expect will be supplied by nuclear power?

Response:

Any response to this question depends upon the resolution of

identified problems with the re-emergence of the nuclear option such as the

development of a standardized design, licensing reform and high level waste

problems. If such problems are resolved, then an ALWR nuclear plant,

probably a mid-sized one, will likely come on line in approximately 10-12

years. The current over-supply of baseload generation is ending and demand

during the intervening period can be satisfied by short-term peaking and

intermediate generation. However, beginning in the early part of the 21st

Century, with the resolution of current nuclear energy problems, there exists

a very real possibility that over 50% of new baseload generation ordered

after the year 2000 will be nuclear. As a percent of total gigawatts of new

capacity to be added from 1991 through 2011, in this country, this new

nuclear capacity will probably only account for 5-10%. The size of this

number reflects the large number of combustion turbines and other fossil

capacity that will come on line before it is possible to bring on nuclear units

ordered after 1995.

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This answer does not reflect on the eventual bright future for advanced MHTGR and

LMFBR technology but only on the time frame for commercialization. In addition, please

see my answer to Question 1(b) above and the EPRI research project report on MHTGR

attached to these answers.

QUALITY AND FOCUS OF DOE'S R&D PROGRAMS

6.

Do you believe that DOE's R&D programs have improved over the last couple of years?

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DOE is becoming more responsive to the realities of the

commercial marketplace and is supporting the kind of R&D programs that

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