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Seismic Omen

Fukushima shockwaves hit America’s nuclear renaissance.

Fortnightly Magazine - May 2011

Comanche Peak nuclear station rocket to $11 billion from $3 billion, with in-service dates moved out 10 years, to 1990 and 1993. (TXU had broken ground on Comanche Peak in 1974.) Its credit rating dropped to triple-B by the time the plant was finished.

But TXU got off easy compared to some utilities—such as Public Service Company of New Hampshire (PSNH).

Based on a strict interpretation of the New Hampshire Public Utility Commission’s rate-making rules, the New Hampshire Supreme Court issued a ruling disallowing PSNH a return on its unfinished Seabrook nuclear plant, effectively shutting the utility’s access to the capital markets and leaving it illiquid. PSNH would be the first utility bankruptcy in over 50 years.

Legal challenges and stall techniques by Seabrook adversaries—primarily the Clamshell Alliance, but also utility regulators and local politicians, including Massachusetts Gov. Michael Dukakis—forced PSNH to file for Chapter 11 protection. At the time, PSNH was the largest bankruptcy in U.S. corporate history. Seabrook was ultimately completed 10 years later than expected at a cost approaching $7 billion for a single unit.

And no discussion of the nuclear industry would be complete without mentioning Long Island Lighting Co.’s (LILCO) Shoreham nuclear plant project. LILCO announced construction plans in 1969, with a projected cost in the $65 million to $75 million range, and a 1973 in-service date. By 1973—still six years before the TMI accident—cost overruns had pushed the estimated final price tag to $2 billion, as LILCO increased the plant size from 540 MW to 820 MW.

Due to mounting anti-nuclear protests, physical construction didn’t begin until 1974. When the plant was completed in 1984 its cost had zoomed past $6 billion. By then, it was the post-TMI era, and the world wasn’t favorably disposed to nuclear power. Opposition to Shoreham was escalating. Following TMI, the NRC issued rules requiring all nuclear power plants to devise evacuation plans in collaboration with state and local governments. In 1983, Suffolk County lawmakers voted 15-1 against developing such a plan, arguing that the county couldn’t be safely evacuated. In addition, the governor, Mario Cuomo, ordered state officials not to approve any LILCO-sponsored evacuation plan.

LILCO vigorously fought the non-participation initiative from 1985 to 1989. However, it was evident that Shoreham couldn’t satisfy the criteria laid out by the NRC for a full power operating license. After a long battle, an agreement was reached with New York State to acquire LILCO and allow the utility to recover its nearly $6 billion Shoreham investment. A newly created New York State entity, the Long Island Power Authority (LIPA), was empowered to purchase the plant and other LILCO assets. The transaction was signed, sealed and delivered in 1998, almost 30 years after the project was first announced.

TXU, PSNH and LILCO are merely three stories from the post-TMI era. This list is by no means complete, but it illustrates the risks associated with nuclear power—an ironic legacy for a “renaissance” industry.

Seismic Risk

Today, approximately 20 percent of the electricity generated in the United States is derived from nuclear plants. Notwithstanding government inducements