The Costs and Benefits of Alternative Funding Levels for the Department of Energy's Light Water Reactor Improvement Program

Pursuant to a congressional request, GAO offered comments on: (1) information provided by the Department of Energy (DOE) on the benefits and costs of continuing the funding for DOE's Light Water Reactor Improvement Program; and (2) the testimony of government and nuclear industry representatives at a hearing conducted jointly by the House Committee on Energy and Commerce, Energy Conservation and Power Subcommittee, and the House Committee on Foreign Affairs, International Economic Policy and Trade Subcommittee.

In the opinion of GAO, the approach by DOE to projecting future program costs and benefits is reasonable and fairly presented. The GAO review of the analysis showed that the potential economic benefits to utility rate payers are substantially greater than the cost of continuing the program. Despite these benefits, the program may not be funded after fiscal year 1982 because of the Administration's policy to fund only high-risk, long-term research programs. GAO stated that any decision to phase out or continue the program should carefully consider the: (1) potential budgetary costs; (2) potential benefits and beneficiaries; and (3) probability that utilities or the nuclear industry will not be able to continue the program at a pace consistent with the DOE schedule. In the judgment of GAO, the views on the economic implications of successful completion and industry implementation of the DOE program were the most significant part of the testimony offered to the congressional committees. The thrust of the testimony on economic implications was that the potential benefits of the program far exceed its costs and those benefits would largely accrue to utility rate payers. However, lack of continued federal funding will dramatically slow, if not stop, realization of the potential benefits.