Controls Blamed : End Seen to Era of Costly Power Plants

The era of multibillion-dollar power plants appears over in California unless there are major changes in how they are paid for and approved, according to a Pacific Gas & Electric Co. executive.

“Until there are changes in the way major projects are financed and licensed, I do not see PG&E; building a nuclear plant or a coal plant in California,” Executive Vice President Richard Clarke said at a news conference.

He said the utility has yet to recover a single penny from its investment in the $5.3-billion Diablo Canyon nuclear power plant, which began operating for the first time less than two weeks ago.

PG&E; has been able to carry the entire expense of construction and costly delays caused by construction changes and court challenges only because of its resources as the nation’s largest combined gas and electric utility, Clarke said.

Customers to Bear Cost

Eventually, he told reporters, the utility’s 10 million consumers will pay most of the cost through rate increases estimated at 12%, once they are approved by the state Public Utilities Commission.

A 6% increase would go into effect to cover the cost of Unit 1--or about $2 added to an average monthly bill of $35. A second 6% increase would be added for Unit 2, which is expected to be completed in August. The rate increases are not expected until 1986 because of the lengthy PUC hearing process.

Clarke said rates should stabilize, or even go down, as the utility reaps fuel cost savings from the 2.2-million kilowatt Diablo Canyon plant near San Luis Obispo and the $1-billion, 1.2-million kilowatt hydroelectric plant that entered service this year at Helms Creek, 50 miles northeast of Fresno.

“In the long term, Diablo Canyon will save our customers approximately $5 billion over the cost of power from other sources in just the first 10 years of its operation,” he said in a Comstock Club speech that followed the news conference.

“The completion of these two massive projects--Helms and Diablo--marks the end of major power plant construction for PG&E; in the immediate future.”

Proposal on Returns

Clarke proposed allowing utilities to earn a return on plants as they are being built by gradual rate increases. He also suggested an overhaul of licensing procedures that have become bogged down by litigation, resulting in costly construction delays.

Each week of a court stay for Diablo Canyon--”what may be the most thoroughly analyzed industrial plant in the world”--cost the company $16 million as it awaited a hearing, he said. The total cost approached $200 million.

Clarke said he doubts there can be major changes in the energy picture unless “something happens to change the whole nuclear power climate in the United States.” But he added, “I’m not optimistic that the institutional changes that are needed will occur.”

On other fronts, he said the utility expects to add more than 2.5 million kilowatts of wind, solar, cogeneration and geothermal power to its system in the next 20 years. It also plans additional purchases of hydroelectric power from the Pacific Northwest.