Analysis of the Department of Energy's Clinch River Breeder Reactor Cost Estimate

RCED-83-74: Published: Dec 10, 1982. Publicly Released: Dec 10, 1982.

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In response to a congressional request, GAO reviewed the accuracy of the Department of Energy's (DOE) most recent cost estimate for the Clinch River Breeder Reactor (CRBR) project.

In reviewing the CRBR project cost estimate, which has escalated from the authorized $699 million to a present estimate of $3.6 billion, GAO found no basis to question the appropriateness of the most recent cost estimates for plant construction and major reactor and nonreactor components. However, GAO found that DOE estimates did not include the cost of plutonium needed to fuel the reactor, and the range of uncertainty associated with other items was significant. DOE has recently stated that CRBR will generate more than $8 billion in net revenues over its operating life of 25 years, after a 5-year demonstration period. However, GAO has found that project revenues could be as much as $212 million lower than the DOE estimate for the 5-year demonstration period and changes to certain assumptions could produce a revenue loss of approximately $2 billion over the 25-year period. Less optimistic assumptions could reduce the revenue estimate by as much as $3.6 billion. In addition, GAO had questions concerning the appropriateness of the inflation rate and the size of the contingency allowance which DOE used in developing the cost estimates. Because CRBR costs and revenues are based on numerous assumptions about events far into the future, the margin of error in cost estimates that contain many assumptions and that are based on future events could be significant. However, GAO stated that, since CRBR is a research and development project, project cost and revenue estimates should not be the dominant consideration in funding decisions.

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