Bellwether Nuke Vote : Oregon Effort Could Set a Precedent for Who Will Pay for Plant Closures

Hard by the Columbia River 40 miles northwest of Portland stands the 500-foot Trojan Nuclear Plant cooling tower, a vapor-belching monument to the Nuclear Age.

Come Election Day, anti-nuclear activists hope to turn it into a relic.

Trojan opponents--worried about safety and the rising costs of running the aging plant--are backing two initiatives on the Oregon ballot this November to shut the reactor right after the election. Rather than make costly repairs, Trojan’s owner, Portland General Electric, wants to phase out the plant and close it in 1996, 15 years ahead of schedule.

In the tumultuous arena of nuclear power, such jousting is scarcely unusual. But in Portland there’s a potentially precedent-setting twist that has riveted the attention of the nuclear industry, energy users, regulators and environmentalists: One of the ballot measures would require the utility’s shareholders, rather than ratepayers, to bear the costs of dismantling the plant and disposing of the massive amounts of radioactive spent fuel at the site--a figure that could run as high as $500 million.

With dozens of the nation’s 110 other nuclear power reactors heading for early retirement because of safety or economics, the Oregon vote is looking like a bellwether.

This is the first time that an investor-owned utility has decided voluntarily to shut down a nuclear plant midway through its useful life, and the financial consequences of that will be eagerly viewed by other plant owners. A vote to saddle shareholders with the decommissioning costs would certainly face a drawn-out legal challenge, but it could also inspire similar efforts nationwide.

Ratepayers in this maverick state might relish making shareholders pay the cleanup tab for what many view as an ill-conceived plant that has been a running sore of a dispute for more than a decade. But some environmentalists fear the fallout from such an action, should other utilities become reluctant to close decaying or uneconomical plants. After all, the longer utilities run the plants, the longer they can collect funds from customers for tearing them down.

“My own view is that you do not want utilities to get the message that the only good nuclear plants are those run past their safe lives,” said Ralph Cavanagh, a staff attorney with the Natural Resources Defense Council in San Francisco. “Utilities won’t do the right thing if you inflict the fiscal equivalent of capital punishment on them.”

Trojan, Oregon’s only nuclear power plant, is symbolic of much of what ails the nation’s nuclear industry, which has ordered no new plants since the early 1970s. The devastating 1986 accident at Chernobyl in the former Soviet Union helped sour the American public’s appetite for nuclear power.

And, in recent years, plentiful supplies of natural gas, renewable resources such as wind power and conservation efforts have diminished the need for it. Trojan is particularly precarious because it must compete with hydroelectric power, the cheapest around.

Like Trojan, many plants nationwide are falling apart far earlier than expected because of faulty equipment, and utilities are finding that it’s more cost-effective to spend money elsewhere. Meanwhile, tons of radioactive waste continue to pile up at reactors nationwide because the federal government has not lived up to its promise to find a repository.

Trojan sits amid 634 acres of woodlands, wetlands, lakes and open space on the Columbia River near the tiny city of Goble. The site attracts nearly 200 wildlife species, from bullfrogs to great blue herons. During summer, visitors picnic at a spacious recreation area, with the giant cooling tower and its billowing vapor clouds for a backdrop.

The tranquil setting belies the plant’s troubled history, spotty performance and ferocious struggle with the anti-nuclear set.

“It would be almost impossible to overestimate the distrust between PGE and the environmental community of Portland over Trojan,” said Angus Duncan, a member of the Northwest Electric Power & Conservation Planning Council in Portland, an interstate compact that does electric power planning and fish recovery.

Since Trojan began operating in 1976, federal regulators have socked it with more than $900,000 in fines for safety violations. For years, the plant was plagued with personnel problems, down time and sloppy practices, although new management since 1990 has helped turn things around.

A 1.1-million-kilowatt plant, Trojan also has a poor record as a power generator, averaging only 54% of capacity. (By contrast, Pacific Gas & Electric’s Diablo Canyon plant near San Luis Obispo, in its seven years, has operated at 77%.)

Trojan’s output goes to the Northwest power grid, which feeds electricity to utilities serving Washington, Oregon, Idaho and western Montana. PGE gets two-thirds of the plant’s power for its 603,000 customers, primarily in the urban corridor between Salem and Portland.

In March, 1991, PGE discovered the most serious problem to date--one that, as it happens, affects many plants nationwide. Microscopic flaws caused by stress and water corrosion were found in tubes in the four steam generators.

The tubes transfer heat from radioactive water to non-radioactive water flowing outside the tubes; the heated, non-radioactive water then turns the turbines that generate electricity.

Concern arose that the tubes, made by Westinghouse Electric Corp., could rupture and release radioactive water if, say, a strong temblor hit along a fault off the Oregon coast. Trojan stayed shut for 11 months as PGE made $45 million worth of repairs and paid $67 million for replacement power.

About 30 other U.S. nuclear plants share the Westinghouse design, and eight have already had to replace their generators because of corrosion. Last year, five plant owners, not including PGE, sued Westinghouse, alleging that the company used flawed designs and did not honor warranties. PGE officials, for their part, say they are attempting to negotiate the matter out of court but are leaving open the option of suing.

After months of study, PGE determined that its repairs would hold only until 1996 and that replacing the generators would cost about $200 million. That expense, coupled with rising costs of running the plant and the availability of lower-cost alternative energy, made the plant uneconomical, PGE decided.

In August, after an extensive analysis in cooperation with environmental and consumer groups, the company announced that it would phase out the plant and close it in 1996 rather than keep it running until 2011.

The utility said it needs those four years to ramp up energy sources to replace the power from Trojan, which has supplied 25% of the utility’s customers’ needs over its lifetime (yet only 5% last year, for example, when the plant was mostly out of commission).

“It will be a scramble to get them on-line in the next four years,” said Alvin Alexanderson, vice president of rates and regulatory affairs. “The assumption that it would be doable immediately is ridiculous.” Alexanderson warned that the immediate loss of Trojan, combined with a harsh winter, could lead to brownouts and force PGE to pay a premium for short-term power contracts.

A vote for immediate closure could also endanger PGE’s schedule for collecting decommissioning funds from ratepayers. As of year-end 1992, the utility will have amassed less than $30 million, a fraction of what will be needed to restore the plant site. (PGE is not alone; other utilities looking to retire plants early will face the same situation because they have collected funds on the assumption that plants would run for their full, licensed lives.)

Observers on both sides of the nuclear scene maintain that PGE’s phaseout announcement was in part an effort to stymie anti-Trojan activists. By that time, two separate groups of Trojan opponents had waged successful signature drives to qualify Measures 5 and 6 for the November ballot in a bid to force the plant’s immediate closure.

The plant had survived two previous referendums, in 1986 and 1990. But the discovery of the steam generator troubles--and concerns over the 440 tons of highly radioactive spent fuel stored at the plant--gave the activists momentum. And they’re not backing off.

“It’s dangerous to operate that silly plant any longer than you have to,” said Marilyn Wilson, who with her husband, Jerry, has spent more than $1.5 million to promote Measure 6, the one that would hold shareholders responsible for the Trojan cleanup.

More than most activists, the Wilsons can put financial muscle behind their Do It Yourself Committee. They are the chain-smoking co-founders of the west suburban Portland company that makes Soloflex, an all-in-one exercise machine promoted on TV and in print by models with washboard bellies and bulging biceps. The 14-year-old company had sales last year of about $50 million.

Marilyn, who bears a striking resemblance to entertainer Roseanne Barr, drives a dark-blue Mercedes-Benz with the license plate NO NUKS. Her opposition to nuclear power started with the 1979 accident at Three Mile Island near Harrisburg, Pa.

Jerry, a former jet charter pilot, still has a passion for flying objects. He recently bought from the Sultan of Brunei a jet with lapis lazuli countertops and 24-karat gold trim.

The Wilsons say PGE is outspending them by several million dollars in an effort to quash Measures 5 and 6. But more than 20,000 of their signs have sprouted on Portland lawns.

Both the Wilsons and their grass-roots counterparts behind Measure 5 stress safety concerns as well as economics. The initiatives are quite similar, but if both pass--as the supporters hope--Measure 6 would take precedence because it mandates a swifter closing of the plant.

“I think it would be a catastrophe to operate Trojan for four more years,” said Lloyd K. Marbet, a gray-bearded nuclear power opponent who has waged war against Trojan since before it was built. “The best people (working at the plant) will be the first to leave, and the rest will be angry and demoralized.” (Hoping to stem a “brain drain,” PGE is offering cash incentives to keep key people at Trojan.)

Marbet, who heats and lights the trailer where he lives with solar energy, heads the Don’t Waste Oregon committee, a coalition that includes Greg Kafoury, a personal injury lawyer, and Dan Meek, a lawyer who represents consumers in cases against utilities over rates and other matters.

Where such activists see black and white, many others see gray. Paul C. Parshley, an electric utility analyst with the Lehman Bros. investment firm in New York, noted that shutting down a plant is not a simple matter of flicking off a switch.

Because the government has not yet found a repository for spent nuclear fuel, many reactors are having to keep running so that operators can monitor the radioactive waste. That, in turn, is forcing up costs and thwarting utilities that want to seal or tear down aging plants.

Making shareholders absorb the decommissioning costs by tapping a utility company’s retained earnings and impairing its ability to pay dividends is shortsighted, Parshley added. Traditionally, ratepayers have been billed for the cost of dismantling power plants, the reasoning being that tearing a plant down is part of the contract with customers.

“Ultimately,” Parshley said, “the consumer gets hurt if the company is so damaged financially that it can’t access capital markets or invest in other energy resources.” Parshley favors letting PGE close the plant early but billratepayers over many years for the decommissioning.

Recent voter polls indicate that the measures have about a 50-50 chance of passage. They have the backing of several environmental groups, including the Oregon League of Conservation Voters and the Sierra Club.

But PGE’s phaseout plan strikes many as a workable compromise. Last week, the Oregon Environmental Council, on behalf of its own board and the Natural Resources Defense Council, sent a letter to members urging a “no” vote on Measures 5 and 6. The group favors letting PGE phase out the plant but continue to collect decommissioning funds from ratepayers as if Trojan had continued to operate for its full, planned life.

“We can choose to take the certainty of a 1996 close-out, with the concurrent ramp-up of more benign energy sources, or the possibility of an earlier shutdown, coupled with huge legal and financial risks,” wrote John A. Charles, the Oregon group’s executive director. “We opt for the certainty of 1996.”