One man's plan to sell foundering nuclear plants to Uncle Sam
Is it time to start bailing out utilities a la Chrysler? Rep. Judd Gregg (R) of New Hampshire has asked the Congressional Research Services to study a Chrysler-type bailout plan for Public Service Company of New Hampshire (PSNH), the lead partner in the crumbling Seabrook nuclear power project.
Under this plan, the federal government would offer to refinance nuclear plants that are at least half finished (38 plants in the country fall into that category). The aid would come in the form of tax-exempt federal bonds or federally guaranteed taxable bonds.
Congressman Gregg is not advocating the plan. ''All he's saying is, let's take a look,'' spokesman Brian Gripp says.
The originator of the plan is lawyer Barry S. Zitser of the Connecticut Consumer Counsel, a state agency that represents the consumer in court cases involving utilities. In the March 29 issue of the trade magazine Public Utility Fortnightly, Mr. Zitser wrote an article spelling out details of the plan.
''I can't think of any other solution to the problem that is affecting the viability of our public utilities,'' Zitser said during a phone interview. ''With the potential bankruptcy of Public Service (Company of New Hampshire) and other utilities, the possible consequences could be devastating to investors, ratepayers, and state economic development,'' he said.
Under Zitser's plan, the nuclear plants would become the property of the federal government, but the government would sell the facilities back to the utilities over a period of time.
There are four utilities that could reap the benefits of a bailout plan. In addition to PSNH, Long Island Lighting Company in New York, Public Service Company of Indiana, and Consumers Power Company of Michigan have indicated that bankruptcy is a threat.
Each has at least one incomplete nuclear plant that needs more money. But Wall Street is leary of investing more into these troubled projects. And the uncertainties surrounding these plants are not helping the financing of the other 50 nuclear plants under construction in the United States.
Nonetheless, Mark D. Luftig at Salomon Brothers Inc., a New York brokerage house, isn't too keen on the bailout idea.
''It's a cop-out,'' says the utility analyst. ''You're taking a cost affecting a few states and spreading it around the country. It's good, I suppose , if you happen to be in a state with a plant and can get another state to pay for it.
''I'm not saying it won't work. I would rather see the ratepayers pay the prudent costs, and if there are any imprudent costs, the shareholders should bear that.''
At the Edison Electric Institute, a trade organization, Kirk Willison says: ''The industry has not proposed any bailouts, and I don't think you will see the utilities rushing into it. Hopefully, there are a lot of steps before this.''
''This is the first I've heard of it,'' says Jon Sheiner, assistant vice-president of Consolidated Edison Company of New York's Washington legislative office, when asked about a federal bailout.
But he says, ''I wouldn't be surprised to see more of it. Some of these utilities are getting close to a rather climactic situation.''
Any federal bailout would be tough to get through Congress, say industry observers.
When Chrysler sought help, more states were involved -- which meant more political support. And, they add, Chrysler had the silver-tongued Lee Iacocca to cinch the deal.