With the everchanging economic and licensing environment of the nuclear fuel cycle, Combustion Engineering (C-E) considered reducing the fuel pellet diameter of its current fuel rod designs. However, the economic incentive to reduce the diameter, considering the uncertainty of the assumptions used for the economics analysis, is at best very small. This together with the negative aspects of reduced safety margins, the increased number of discharge fuel assemblies that have to be stored or disposed of each year, and the change from a design of proven reliability all yield the conclusion that the current fuel pellet diameters used by C-E should not be changed. The conclusion differs from that reported by others as a result of the use of more sophisticated neutronics calculations and more realistic definition of fuel cycle cost parameters. This analysis was performed using C-E’s most advanced neutronics model, DIT. The model was applied to high burnup fuel (48 MWd/kgU) and cores operating on 18-month cycles. To maintain constant batch average discharge burnup and constant energy production, the number of assemblies in each reload batch was increased as the fuel pellet radius decreased. Finally, the fabrication and disposal price was adjusted as the assembly loading decreased such that the cost to fabricate or dispose of each assembly was kept constant.