Costly Losers

BLARING HEADLINES last week trumpeted the news that a new financial plan had been worked out to save the Seabrook nuclear power plant. Smiling utility executives declared that the new financing-which entails the borrowing of close to $1 billion-will allow the completion of the first unit at Seabrook and prevent the bankruptcy of the plant's leading owner. Public Service Co. of New Hampshire. Work on the two-unit power plant had been halted in April when Public Service ran out of money and announced that it was on the brink of default.

The trials of Seabrook and its backers underscore the fact that nuclear power is on precarious economic footing. The owners of Seabrook have already cancelled the second unit at Seabrook: it is 23 percent complete and apparently would have no chance of ever turning a profit. Long Island Lighting Co. is facing similar nightmares with its Shoreham nuclear plant: Lilco is desperately trying to finish the plant before it runs out of cash entirely. If construction drags on much longer, Lilco may face a situation much like that of Public Service Co.

Both these nuclear power projects, as well as many others across the country, have been plagued by construction delays, costly design changes, and ballooning costs. The Seabrook plant was supposed to cost $1 billion when it was first proposed in 1972: its estimated total cost rose meteorically to $3.5 billion in 1981. $5.2 billion in 1982, and $9 billion in March 1982.

These costs will clearly be passed on to the utility customers. As revealed six weeks ago, utility rates through much of New England will rise markedly when the Seabrook unit is completed and finally goes on line, possibly sometime in 1987. Even so, the plant may never pay for itself. Paul F. Gray, head of the Massachusetts Department of Utilities, said of Seabrook, "What is being built was going to save enough oil to pay for itself and in time it might. But that may, not occur for seven to 10 years, if ever-so what customers see in their bills when the plant comes on line is rate shock."

Seabrook and Shoreham are two blaring indications that it may well be time to think twice about the viability of nuclear power plants-as well as of large coal-fired power plants-on economic as well as environmental grounds. In fact, many environmental groups are now adopting just this economic tack. And a growing number of studies have shown that many of the nuclear plants now under construction have little chance of ever paying for themselves.

Unfortunately, however, such realities have been largely lost on utility executives and the nuclear power industry. They are forging ahead on Shoreham and Seabrook and other plants. This despite the expensive lessons of recent years-enormously costly power plant cancellations suffered by several utilities.

In January 1982, the Washington Public Power Supply System (unaffectionately known as "Whoops") defaulted on $2.25 billion in bonds issued to finance two of its six nuclear power plants; WPPSS is still trying to complete two of the units, while two others have been mothballed. Even more expensive was the cancellation just four months ago of the two Marble Hill units in Indiana. The units were 56 percent and 35 percent completed respectively, but the utility still did not see any prospects of black ink. An Indiana Governor's Commission had estimated that $7.7 billion was needed to complete the Marble Hill units and that future electricity demand did not justify such huge expenditures.

This seems to be the case on a broader level as well. Estimates of future electricity demand continue to be scaled back; the days of an annual 5 percent rises in demand seem long gone. Nevertheless, enormous investment in future generating capacity continues unabated. Over the last decade, construction of power plants has consumed around 10 percent of all private domestic investment.

And many want to continue opening this massive drain. In June of last year, the Department of Energy released a report calling for an enormous power plant building program, geared to meet hugely inflated estimates of electrical energy demand. The DOE scenario would channel one tenth or more of all private domestic investment in the next two decades into power plant construction.

THIS EMPHASIS on huge-and, increasingly, unreasonably expensive--power plants, whether nuclear or coal-fired, relegates other sources of power, such as conservation and the use of renewable resources, to the back burner. Under the DOE plan, conservation measures get last priority. Meanwhile, however, an experiment going on now at Hook River, Oregon, where an entire town was refitted with the latest in energy efficient insulation and appliances, seems to be proving that conservation can indeed quickly pay for itself and eliminate the need for many additional power plants.

But utility executives and many other energy planners appear blind to the clear indications that the scale and cost of electricity sources tends to be inversely related to their cost-effectiveness and, because future electricity demand may vary, flexibility. And still the costly lessons continue. One unit of the Seabrook nuclear power plant now seems headed for completion, but New England utility customers will be paying the bill for many years to come.