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{{#Wiki_filter:. L., t 03333" UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSIOl BEEQBE_ISE_6IQUIC_g6EgII_6HQ_LICENSINQ_SQ6BQ ) 00M4 [foy,p V In the_ Matter of ) ) WASHINGTON PUBLIC FOWER SUPPLY SYSTEM ) Docket No. 50-460CPA8 Nk # 9 et. al. ) y jfg, (WPPSS Nuclear Pro]ect No. 1) ) C96LIII9N E98_58EE_EQWE8_EIBSI_gEI_QE_INTEBBQQ8IQBIES I9_Hgc_SIaEE,_qUNE_2t_12f}z INTERROGATORY 1: State the full'name, address, pr occupation and employer of each person answering the interrogatories and designate the interrogatory or the part thereof he or she answered. INTERROGATORY 2: Identify each and every person you are considering calling as a witness in the event a hearing is gpr held in this proceeding and with respect to each of these witnesses: a. State the substance of the facts and opinions to which the witness is expected to testify; b. Give a summary of the grounds for each opinion; and c. Describe the witnesses' educational,and professional backgrcund. INTERROGATORY 3: What is the complete basis for your position that Licensee's decision in April,1982 to ' defer" beW construction for two to five years, and subsequent cessation of construction at WNP-1 was not " dilatory." t .NTERROGATORY 4: Please explain fully what you mean by the word " defer" INTERROGATORY 5: Please explain fully what you mean by l the word " dilatory" INTERROGATORY 6: What is the basis for your response to interrogatories 4 and 57 INTERROGATORY 7: Why do you contend that Licensee has established good cause for an extension of the WNP-1 L,e* construction permit? Explain your answer fully. INTERROGATORY 8: What are the reasons Licensee offered to NRC in support of a showing of " good cause" as required by 10 C.F.R. 50.55(b)? INTERROGATORY 9: Is it your position that the reasons offered by *_icensee to support a showing of good cause are 8409270343 840824 PDR FOIA COHEN 84-603 PDR
2-in fact the only reasons why Licensee had requested an extension of its construction permit? INTERROGATORY 10: If your response to Interrogatory 9 is no, state all other reasons. INTERROGATORY 11 : What is the basis for your response to inter'rogatories 9 and 107 INTERROGATORY 12: Please explain fully what you mean by a " reasonable period of time" INTERROGATORY 13: What factors do you contend should be condidered when determining if a requested construction permit extension is for a " reasonable period of time"? INTERROGATORY 14: What do you contend would constitute a "reasonsble period of time" in the case of WNP-17 INTERROGATORY 15: (a) Is it your position that BPA support is necessary to the financing of WNP-17 '(b) if your answer to Interrogatory No. 15(a) is in the affirmative, identify and giv e full details with respect to all information upon which you base that statement. !NTERROGATORY 16: Is it your position that the L' financial support or lack of financial support by BPA for bed WNP-1 would have an effect on the financing costs of WNP-17 INTERROGATORY 17: Is it your position that the opinion L-gp #* of BPA as to when WNP-1 should go into commerical operation W would have an effect on the financing costs of WNP-17 l INTERROGATORY 18: (a) Is it your belief that BPA has the authority to disapprove any further financing of WNP-1 p) construction? g,,e (b) If your answer to Interrogatory No. 18(a) is in the affirmative, explain fully the factual basis for that statement. INTERROGATORY 19: Is it your position that the growth rate of electric power requirements has a business relationship as to when WNP-1 shculd go into commercial operation? INTERROGATORY 20: (a) Is it your position that the January 11, 1983 letter to H. Denton, Director, NMR, NRC from G.D. Bouchy, WPPSS, supports Permittew's essertion that a deferred.need for power constitutes " good casue" for deferring construction? (b) If your answer to Interrogatory No. 20(a) is in the affirmative, set forth and explain fully the factual basis or legal authority for your position. INTERROGATORY 21 (a) Is it your position that a lack of need for power can, as a matter of law, constitute " good
\\ -g cause" under 10 CFR 50.55(b)? (b) if your answer to Interrrogatory No. 21(a) is in the affirmative, set forth and explain fully the factual basis or legal authority for this position. l INTERROGATORY 22: (a) Does the lack of need for power in the Northwest Justify deferring construction of WNP-17 (b)-Explain fully your answer to Interrogatory No. 22(a). INTERROGATORY 23: Explain the factual basis and/or legal authority which supports the position that six to nine years is a ' reasonable period of time' under 10 CFR 50.55(b). INTERROGATORY 24: What do you believe would be a (maximum) reasonable period of time for extension of the construction completion date for WNP-17 INTERROGATORY 25: (c) Identify any and all " requirements of any regulations" promulgated since the date of docketing of the WNP-1 operating license application from which WNP-1 would otherwise be grandfathered by virtue of its date of docketing. (b) Explain fully how each of the requirements identified in response to Interrogatory No. 25(a) will delay completion of the plant beyond the requested completion date of 1991. Give full details as to the extend to delay attributable to each such requirement. INTERROGATORY 26: Explain the difference, if any, between deferral, mothball and preservation. INTERROGATORY 27: To what events is the restart of JglpE construction on WNP-1 tied. Explain fully your answer. INTERROGATORY 28: What would be the effect of default on WNP-4 and 5 on the restart and completion of WNP 17 Provide all probability analysen, scenarios and time predictions. INTERROGATORY 29: What is the effect of deferral of construction on WNP-3 on the restart and completion of WNP-l? Give the basis for your response. INTERROGATORY 30: What is the effect of bond ratings 'on WPPSS ability to finance WNP-1. Explain fully and provide the basis for your response. INTERROGATORY 31: If a bond rating service refused to b# je rate WPPSS bonds would WPPSS be able to finance the construction of WNP-17 Explain your answer. INTERROGATORY 32: Is it your position that the Atomic r f D'k Safety and Licensing Board Initial Decision (LBP-75-72, 2 NRC 922) for the Construction Permit found that the 1
l 2. . 4 Bonneville Power Adminstration had the power to approve or disapprove the issuance of bonds by WPPSS. If yes give the reasons in detail for approval and/or disapproval. INTERROGATORY 33: Is it your position the ASLB Initial j d e Decision (LBP-75-72,. 2 NRC 922) found that BPA could control LI the construction of WNP-l? If yes, in what manner? Explain in deta11 the basis for your answer. /' INTERROGATORY 34: Is it your position that the original p finding by the ASLB in its Initial Decision (LBP-75-72, 2 NRC 922) on WPPSS financing ability remains valid? Explain the basis for your answer in detail. INTERROGATORY 35: Is it your position that the original finding by the ASLB in its Initial Decision (LBP-75-72, 2 NRC 922) on the need for WNP-1 remains valid? Explain the basis for your answer in detail. INTERROGATORY 36: Is it your position that the only reason the ASLB found WPPSS financially qualified is because of BPA financial backing? gj## (a) If yes, explain the basis in detail. [ (b) If no, cite all the reasons you believe the finding \\ of financial qualification. INTERROGATORY 37: What constitutes " good business sense" in decisions on nuclear plant deferal? INTERROGATORY 38: What constitutes "BPA support"? INTERROGATORY 39: How is "BPA support" recognized in the Initial Decision (LBP-75-72, 2 NRC 922) on the . Construction Permit for WNP-l? l)/l INTERROGATORY 40: Is cost of financing an issue in this gp proceeding? If so, why? INTERROGATORY 41: Is need for power an issue in this proceeding? If so, what are the issues which should be litigated with regard to need for power ? INTERROGATORY 42: What is the legal basis for your answer to Interrogatory 41? INTERROGATORY 43: What, besides the Applicant's representation on the need for WNP-1, does the Staff rely upon for its positica on the need for the plant? INTERROGATORY 44: Was the construction of WNP-3 (Satsop) halted because of no need for its power? (a) If so, how does this affect the five-year deferral of WNP-1? (b) If not, what were the reasons and how will they affect the deferral of WNP-l?
e
- v; INTERROGATORY 45: Is the ultimate cost of power fros WNP-1 a factor in the need for the plant?
Should it be a factor in the business decisions affecting continued construction? INTERROGATORY 46: What is the Staff's position on the relationship between' time and the deterioration of partially constructed' facilities and equipment? Provide the basis for this position. INTERROGATORY 47: What is the difference between BPA withholding approval for financing and BPA disapproving of financing? INTERROGATORY 48: What level of staffing is necessary at WNP-1 to maintain the construction site and equipment without deterioration ? / INTERROGATORY 49: Is it your position that the only y,we obstacle to financing of the WNP-1 was/is the BPA J recommendation? INTERROGATORY 50: Do you agree that the passage of Washington Initiative 395 affected the ability of WPPSS to issue bonds? Explain your answer fully giving the basis and identify all documents relied upon. Respectfully submitted, Dated this day, the 9th gge/__ _ of June, 1983. Eu ehe Rosoile, Director Co ition/'for Safe Power
e / WPPSS Radngs Suspended by Moody's On Bonds for Nuclear Projects 1,2 and 3 Mm M%nu, k. '# A Sw?% STO N. O C.20CCS Frcnt Ed t cener 5 maxe the payment, and wocid give 2e rog,
- rog, pop By Esax Leo" l power system 90 days to correct the default.
I sreff nep. er e/ Tuswm srnsev Jwns'u. But last week a Washinr.on state judge p'Z. 3 ", m..... e,[C "" - e ~ tn default. The bank has 30 days, from the " "d * ~ ["
- ca - 40N-'
ruled the banx couldn't detiare the system NEW YOR.K "" ' '-"-- t"vice Inc. sa2d it suspenced ce racngs et so btl-l< !!on of bonds ased to Snance Washmgton ' May 2f ruling date. to sppeal the order. "Wei M 2 1993 Pub!!c Power Sapply System's nuclear prol-haven't decided not to appeal, but then gp,r:3. g 9,g ects Nos.1, 2 and 3. again we haven't decided to appeal." said 8 The move ts signi5 cant because the William H. Berts, vice pres: dent, trust and investment divtston of the bartk. -We are go- "This market !s so th:n dat it's very. bonds have been viewed as disunct frorn bonds issued for canceled projects Nos. 4 tag to continue to censider on a daily basts hard to te!! you what these bonds an j and 5. The bonds for projects Nos.1.2 and 3 whether to appeal or not." worth." said the head of mu:te: pal ic.ad.-*- l sesrch at one :arge Wa!! Street arm. "The i are backed mdirect!y by evenue from the James Perko chief financial ofScer for
- rde al Bonneville Power Adtmnistracon.
the Washing'on Public Power Supply Sys.' gap betwees the tid and affetad sides Ls so - N, wide you can drive a truck $ rough it." while bends for projects Nos. 4 and 5 are tem, based in Richland. Wash.. said. "We re Another munte! pal bond spe":anst fe-backed by 38 unlides. Many of the uti!!ues. disappoutted." but added tae system didn t have refused to pay their obligacons and. have a bond issue pending that would be di. scribed trading as "speradic." wid "On;y a few" sma!! trades beer dcre at his *:rm. are chaueng ng detr debt m court, rectly affectM by the rat!ng. "From that The pc':ver sptem s 15". bcncs due 717 Moody's accon follcws by less than a standpctnt, it's a disappointment, but not & were quoted at one him at t ;r'ce af 13 Oid. mond a dec:s;en by Standa d fr Pw' t major problem." he said. 96 offered. down fcur pomts ficm Mer. day 3
- Corp. to suspend its rateg :mecs.ws.
The Moody's turnabout demonst:ates
- 1. 2 and 3. At the ume. the credit-rant:g heightened concern for the power supply c!cse.
i cornpany cited ccncerns that ce system system, which started ;n the early ~0s as a g . macht have to (11e under Chapter 9 cf 2e. grand plan to provide inexpensive power. .g l ' federal Bankruptcy Coce, wh;ch dea:s sia But forecasts of power derrand showed that g ) municipal concerns. .111 the planned electncity wasn't necessary. i Moody's, tn its announceme-t. said it sus-Cur ent'y. projects Nes. 4 and 5 have been i ' pended the ractgs 'because cf ancerta.nnes cance!ed a-d project No. I was suspended tn
- concermng the
- eng-temi ateg sty of all as. A;rt! I?K for a mammurn of nye yea.s.
sets of de supply sprem and a !ight of the, Last weet the pcwer system's execuuve nonpayment" of a monthly payment. It also b ard <oted to suspend ;rojec5 No. 3. about suspended the ranngs on tuo WFPSS :sst.es r*F.Ms compW. as w61. Mt No. 2 is that aren't direct:y related to the nuc! ear neady compMe. The susion of No. 3 l projects. A suste e "" -- util result in de layof's af 1.250 over the i , too eeem. o ut an.sn.e to - it a j next two months. Gary Lundg-en, execuuve vice pr=sident l i Nafter S&P'.s move *c suspend me rat. 'l ngs May 13. Craig W. Arnater. Mondy's.e re of Marshall & Meyer Inc., a munic: pal bend i se 3 nior revenue bcnd sn.alyst had sa2d...% the power system's bonds said the Moody's snll of 2e optnion the ;! edge of Scnnevt!!e acton is "just a refleccon of mountag con-does prov'.de secanty that ts appregnate for cern over the lack of leadership out of the , a Baa debt. Pact 5e Northwest to resolve the problems of f Mr. Atwater said the failure to make the 4 and 5." He said the " Chinese wall" be-i mterest par.ent changad 2at. But what ef tween the bonds for those plants and for ' feet could dat have on projec*s, Nos.1. 2he sa2d.. pro;ects Nos.1. 2 and 3 is breakmg down as l and 3,? We aren't quite sure, . the threat of default on Nos. 4 and 5 That s why we suspended it. gang 3, I On Tuesday the power system failed to. On bond markets, pnces of WPPSS bonds make a $15.6 million monthly interest pay-tumbied again yesterday, although trading ment to Chemical Bank. New York, the ; was extremely light. Dealers said they trustee of the 52.25 billica m bonds issued for rnarked down pnces on some WPPSS tssues projects Nos. 4 and 5. by as much as four or five points. A " point" Moody's yesterday also said it assigned equa!s $10 for each $1.000 face amount of its Caa rating to the power system's projec's bcnds. Nos. 4 and 5. clung the failure to make the Chermcal Bartk payment. The ranng had been suspended stnce Jan. 7.1982; before that the rating had been Baa 1. Mr. Atwater said. The agency said bonds with a Caa rat-ing "are of poor standing. These issues have l present elements of danger with respect to the payments of pnncipal or interest." Chemical Bank had said it would declare the power system in default t! it failed to t - - ~ ~ ^ ~
R E 30 TS, isc. RADIO ~ i .g 4701 WitiARD AVENUE. CHEW CHASE, MARYLAND 20815 65684C68 NUCLEAR REGULATORY COMMISSION pon 4 PROGW CBS Horning News STAnCN WDVM-TV CBS Network OATE June 16, 1983 7:00 A.M. cry Washington, D.C. 8ALECT Ruling on Financing Nuclear Plants SUSAN SPENCER: The stage is set for what could become the biggest default in the history of the municipal band market. The Washington State Supreme Court has ruled that utilities in the state don't have to pay off on bonds used to finance two defunct nuclear power plants. That debt amounts to 52 1/2 billion. The ruling is still open to review, but it has sent jitters through the bond market. Y AND CNEit MINC% CTE5 CEES M WASMNGTON O C.
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N, PA. 1 - 59,863 SUNDAY pn high court! TnE SPnxuGPrEtn board and-7 six ether city 4wned utilices in O
- INQUIRER, PHILADELPHIA gist invested in the nuclear plantsalongwith four Oregon public utility JJN 101983 gggg,gg74 g p g g g E.
852,126 The appeal was f. led with the Ore-SU'! DAY district 5 gen Court of Appeals. But in an,un-PPSS bidscandall SA. usual move.the two courts agreed tocase bypass the appeals MAALES E.BEGGS / unusess Pr== wets rt is to have the directly to the Supreme dure is al- 'DOIlld3U -gon Supreme Cou -,',.m' aments today in a lawsuit
- court and go d f ffect thousands of Ore Court. That new proceIowedunder a taw passedin 1981 Yar edsmnal d hue 3 in
..~ TO ** D'0" Bestces Spnngfie!d. the suit m-which you agatn attack GPU Nu. electric bills. the volves c 'Y. owned utilities in Drain.Canby, Bandon. Cascade toe uit is cna of those m, clear at Three Mile Island formanagement mef legaltangle that has result-Public a.upply 3y,g,,.s huge finan McMinnvi!!e and Milton-Freewater. casual practices with respect torestamg Unit 1. Washmgtor l Lincoln.Tll-tai oblIms with its now.aban TheClatskante,Centralamodir and Northern Wasco public s mwe olant projects a? GPU Nuc! ear, owner of Three Mile Island. also operates a 629-suyc i t$ massive. Mort than' P55 LAWYERS contend that ' megawatt nuclear power statica [* and' ' ' 'l el':wyers areinv%m 2e the case poses potentially ~senous at Forked River.N.J.This station, known as Oyster Creek is the written briefs fued wi roblems. with i oldestcommere:alnuclest power tasal more thaar IJ100. pages. Teng nnge p 11 the Supreme Court agrees station in the United States andhas been op Woodnch.WPPSS attorneys argue in
- lawyers were ' scheduled to bnefs.~tt willundermme public con. drastically impair the e the case ar today's bearing.
ne performance of a staum o suit is an appeal by WPPPSSruling last fall by Lane Cmanty tracts andpower ' 0' the p n j. hu 13 ye uit Judge George Woodrich. he public that arv far one blem12 on its record. ,t I at.sidthattheSpringfieldUtility Thaieey say, rd and 10 other publicly osmed, sequences fbr tthe economic impact of Why would the identical top h ties in Oregon,didn t have au worse t anthe contracts. ! management of GPU Nuclear rity to t'gn contracts obUgating enfortill6"WYERS on the other side manage a very efficient opers-tion at Oyster Cr BUT LAthat ratepayers shouldn't be apayers to pay for WPPS$ plantssad S, which have been mot argue saddled wi incongruously operate Three h Mile Island in a dt!ferent man. ee 1 WOOORICH'5' decision,if upheld, tnantstobuypowe3,y,,yNPSS. scheme cut away' DI D.e answer u obnous -it ;
- ied.'
maid steeld the unlities' customers waldn e DAVID H. BUERKEL j bonded.guelevateget acthedeviloka om rate increases to pay off their The 'h t that, WSur cassunsetion s'i thepinats. dpated power shortage t a Inre of the SUS mitMost la y.g.g came!' John Faust, an attor-for two of the public utility dis I N hr m "' nelastotaLapa perengt shass {tha.. said in his written briefs. )- .The II Oresma twoplants.. 2.0- e,w by # Woodrich naled he a soit filed Spangiteldrecupeyers,that he ties' contracts are void because tagreements were made inytoladoe d nicipat- .og,ssaae law 1mdTocal mu.J.,.4.!J :s:.u'.WA d chassers. n
O e Ne3J bnle.b'gence, bnc. WASHINGTON. O.C. 20CC5 Boardaf WPPSS eco -
- 11-c,8 c Page Page Page ToMeet Friday; m a== ===.s
--EA3TER:1 EDITIO;l-- Bond Default Seen JUN 2 0 B83 MORNING - 640,054 S&P cited the supply system's decision to av a wu.s. smrr Jovme, staff Raponer SEATILE - Washington Public Power suspend construction for three years on urut Supply System's executive board will meet f No. 3 unless financing for its 70". share in here Friday to consider its options in the the plant could be obtained. Such a delay wake of the Washington state Supreme could increase the risk of more cost over-Court's decision last week freeing Washing-runs for the four investorswned utilities, too utilities trom their obuganons to pay S&P said. their share of $2.25 billion in WPPSS plant A bankruptcy-law 51tng, he noted, would Nos. 4 and 5 debt. dissolve the barrier that exists between Although default ort the plants' bonds is plants Nos. 4 and 5 and the Bonneville now a near certainty, Carl Halvorson, board Power Administration-supported plants Ncs. chairman, tried to discourage speculation 1,2 and 3. The debt for the groups is cur-that the system will opt for a voluntary 51-rently secured separately. "Taking bank-ing under Chapter 9 of the Bankruptcy Code, ruptcy isn't gotng to pay any bills," he said, wluch regulates municipal barJtruptcy. "I adding that such a filing would most likely don't see it as an attractive option at this IcIl any chance of raising the 32 billion to $3 point or at any point. It doesn't do anything billicn still neaded to complete plants Nos. I for you. The lawsuits aren't going to go and 3. Plant No. 2 is near completion and away," he said. should come on line later this year. As reported, the supply system's interest All four investorswned utilities have op-reserve account has enough money to meet posed delays in the nuclear pcwer plant's the July 1 interest payment on the bonds of completion. plants Nos. 4 and 5 but won't be able to Pac 15e Power's first-mortgage bcnds are make the payment of next Jan.1. With cash rated triple-B, Portland Generars bonds are dwindling. the system has suspended pre. rated triple B minus, Puget Sound's bonds ventive maintenance on the partly built are rated triple-B, and Washington Water's plants and halted contract settlement negoti. bonds are rated triple-B-plus. ations with contractors and equipment.sup-pliers. Meanwhile, the supply system's woes continued to affect other Pacific Northwest utilities. Standard & Poor's Corp. added four. Investor-owned utihties with a combined: 30". Interest in WPPSS plant No. 3 to itsi CreditWatch !!st. S&P cited negative credit implications for bonds issued by Pacific Power & Ught Co., Portland General Elec ' tric Co., Puget Sound Power & Ught Co... and Washinston Water Power Co....._i j l l . = -. -m-r - -.m y - sr mny K.' " * "
Insurers,theBigges":Inves": ors in WPPSS, Face Huge Losses if Power Sys :em De 'au ::s bonds, in ehdon to State Farm, include base. But 'ntwere "y they could handle By Datzt. Hartzsenc smtf anewe/ Tu w4u. srnm Jotam e,grican Express Co., with about C0u mil-such huge losses because they have ega!!y NEW YORK-Insurance companies may lion; Crum & Forster, $137.6 million: Conti-huge paper prohts on oder turn out to be the biglosers if things get any nental Corp., $139 million; and HT Corp's bonds. worse at the Washington Puti!c Power Sup-Hartfoni Insurance Group, $115.9 m1111on. "ne balance sheets of the insura.ce in-dustry have gotten so much healthier over ply System, ne National Association of Insurance the last 12 months that a wnte-down Property casualty insurers are probably Commissioners has already made compa. wouldn't be a major factor," says Mr.1.und-the biggest institutional investors in the tax-nies wnte down as much as 70% ort their berg of Crum & Forster. He says his cer.- free bonds issued by WFPSS. De supply pany's portfolio grew "by at least !600 m 1-system seems certain to default on about 32 lion" in the past year billion of its bonds. But it could default on 80me insurers may Davd Seifer, an ardlyst at First Scsun more-it has more than $8 billion in bonds outstanding-and in that case insurers-have tO ratSe their rates Corp., figures that the market vaiue of m-surers' bond portfolics, long depressed be-I e System au{tS. might have to write off hurdreds of millions But some gay their prof. cause of high interest rates, rese last year of do!!ars in assets. by 10 or 15 cects on the dollar, If that happens, some companies may All the turmoil over W7PSS comes at a have to raise their rates. Insurers seem con-itS On Other inteSfmentS difMt time Mr propeny casucy bsurers. 5 dent, however, that the power system won't default on all of its bonds. And even if in the paSt 12 months For me past four years. 2 : terce pree ur has been raging amcng insurers, depress =g it does, some say dat the industry can eas-Sill Compensate tor any ,,mm,,c,,,,.su,1,c,,me, a,.d,ene, ee ily absorb big WPPSS losses. Property casualty insurers held $1.15 bi!- K p p $ $ lOSSeS. Industry's operaung proht dm 7, Im lion in %7PSS bonds at the end of ISC, ac-year. Some insurance executives say it will cording to A.% Best & Co., an Oldwick, holdings in the Ncs. 4 and 5 bonds. But be-take a major snack, Ilke a costly hu N.J., research concern. Heading the list is State Farm Mutual Automobile Insurance cause of its overall financial health, even a to dnve commercial rates back up sgam. Co. in Bloomington, Ill., which owns C57.2 writedown of all WPPSS holdbgs "wouldn't (Personal automobile msurance rat be a matter of serious concem to us," says ever, are dsing.) But they doubt dat even million in WPPSS debt. Many big companies say they hold rela-1 State Farm spokesman. a major W7PSS default will do the ;cb. Cur-tively few of the hlgh-risk bonds, which were Although most of the big insurers say rently, the combtned assets of prefertycs-issued for nuclear plants Nos. 4 and 5. Rey they have already sold their Nos. 4 and 5 u'aity insurers exceed their liabilmes by 36 say most of their holdings are !n %7PSS bonds-if recently at a substantial loss-an billien, dwarfing the WPPSS holkgs. exception is Amencan Express. It still has ! ,s3J-nish4i[Jence, Onc. bonds for projec:s Nos.1,2 and 3. which are $90 million of the bonds in its portfolios and backed indirectly by revenue from the fed' eral Bonneytile Power Administraton. those of its Fireman's Fund insurance sub. wasmsres, o e. = cees Insurers et,nsider a default en these sidiary. Front Edit Other bonds unlikely. "De federal government State regulators usually let insurers Pega Pago Pop wouldn't like to see the creditworthiness of carry bonds on their books at origmal cost
- one of its agencies besmirched," says John even though their true value may be much WALL 3~._3 ;,=:,g
! K. lamdberg, vice chairman and chief finan-lower. But in the case of the Nos. 4 and 5 __ggg g g g;IO N - cial officer for Crum & Forster, the insur-bonds, the association of insurance commis-20 W ance subsidiary of Xerox Corp. "Bonnevi!Ie sione told companies to list them at Power will Ond a way to make pannents and service the debts on 1,2 and 3." he Some of the Nas,4 and 5 bonds are trad-says. ing at about 25 cents for each dollar of face Nonetheless, federal help for the troubled power system is far from assured. And on value. Such a heavy writedown would cut Friday, it indirectly suffered another set. ' deeply into the capital base of a company back when Standard & Poor's Corp. put four with large holdings. However, Sanford Weill, utilities en its credit watch list because of president of American Express, says the their financial involvement with plant No. writedown won't have a big effect on the capital base of Fireman's Fund, which is 3. Property-casualty insurers traditionally $1.4 billion. buy a lot of tax <xempt bonds, and because If the insurance commissioners made the WPPSS is the country's largest tax. free is-same decision on Nos.1,2 and4 bonds, com-suer, their investment in the power system panies would have to write off hundreds of isn't surprising Major holders of WPPSS millions of dollars, reducing their caply " ~ Al W v m a.mm-- ~ ~ m.w,+,..,..q w.n = -. v, e ,w
4 l . F20 #.' '. P s,. : v. A. si san TIII: Wast!!NGTON POST '?r*i.- .Y j 6, SomelliksifConsequences of thelWPPSS Decision e ? 'll J ni 61i4M '. Tho 'Tred*"'Y market led. tha .i.inwdappeadit,seifM. MXED INCOMEINVESTMENTS '""",' ";"l,'s',",,';' "lfi y,i i, 'h a g ,. ing densum for Waslyngton state,ita j This was a situatinin where technical s g supreme court delivered an'pdversi ruhng regardmg the validityisi tho j fccis that tho ilerisiini will luve sev : l'nurth, oilker joint action apen. forces, led by technicians and chart-i ries -two or more utilitietcombmeil ists, plus a imost Innn the likely re- ~ contractugl agreementa between tho. ' eral ef fects. I?irst, who rects that de-i I?;deral ileservo 6 k Rcom s. a virmal rettainty. tu provisto co:st offective electric alliniintenctit sif t
- System and some o{ the 88 partic.J
,ui g Waslungton, Pubhc Power bupply, ggoweyi.r, defaidt nmy niit onni s power-are going to feel the imimet thmrd Chairntui Paul A. Volcker, until January, as funds are ovuitablo[of the courfs decision in the market. overcame the strung fundamental i 3 spalmg utilities. ,jgh Ilm hustet-be meet the July,' place. forces of nutsply, a strimg ecoliorny k .'the devastatinig ruling pimojvod interest payments. Scronil, thero will ' $ l'inally, pml' entremely important, ami, rising tuonetary aggregates. In. 8!Lhe Washington enuuicipalities dix l i he increa3ed pressuto on Wl'PSS to 'Austen thinks that (here is a possi-. Idct. strong intying resulted when l Ipublic. utility ydistricts. from: their r tile for Chapter 9 hankruptry. If this bility underlying all of this that the. thy long lanut traded down near the { /take or pay" contractual agreementM occurs, all five pmjeits w'l ho forced sermity behind the lxnuls of projects lasttom of its trading range-91b or I [to service the. debt can $2.25 hlllione ' into bankruptcy, which cannot he. No. I,2, and :t, could also be direct-Il percent. Iluyers were hoping that , worth of lxnids for the construclien i enterni into by the inilividua.l lim-ed. She refers here to the Spring-in-ices wouhl advance back to lhe top R ,;of WPPSS nuclear projects.No. 4 1. jects. richl, Oro.' lawsuit in which the val. of its trading range --lul % or 10.20 Next, Austen feels that the prus; idity of the " net billing" agreements percent. r . pud fx ,g ;, - e s Eileen Austen, a savYy municipal pect of WPPS3 obtaining tinancing ' was challenged. Th Tnam wdl oUer ho is- }:. analyst who has followed tiie situ i to onnplete pn.iect No..I ha.s been 'the dutrict cotirt ruled that these sum this week in its end-of-spurter ation for Drexel llurnham I.umbert,' I retulered, virtually nonexistent. agreements were valid and enforce-financing. A four-year mite win he .able, llowever, in light of the state uuctioned on Tue* lay, a seven. year httprelne rourt,s ruling, line dcctstoll tu[te ant Wedlicaday, and a 20-year [Jss.Nn[Ngcribirl$n'i.) f,[,'~{. "f,\\'a'""j t{; i c{,'f. I""^ "" %"'hY %e** k"." *M r collio ill Il tiilutnit dellomillatiotis of WASHINGTON. D.C. 20005_... $I.000 und shouhl returi 10. lf> per-Froni Edu Other. ii Pogs Pass Page.hi,.y.. f hillmg contracts.is not yet removed. rent,10.70 percent, and 11 percent, in light of the abovo, Austen feels respectively. They may be sub-WA'M!!:' HON. D. C. ! Ihat bnida holding one's breath, ,c,;ix.d hi at no chargo, at any of Ihe i "'"*'"'*",'"""'""d*"'"'"' Fede'd' l'e '""k" "r "t the u.S. ynTD RN.l 0 E jects No.1 2. and :l, and as far as l Treasury in Washingti,n, I).C. ,' omt f go, It's alreagly too late. Invest-IJORNIt!G - 504,500 ors onda use the lism h, og3et I.. Idrer: Ims a ycors'i xperience i Sl!!! DAY - U 0 0, 4 5.a. pn. tits in equities or other areas, in fixed-imome irme.stments. s 2 1 I
a PR$$ Beilweather oWest's H i saleinioRYWe[ I Statesmari-Journa$ [y, I / (Cir.D.' 64,7191/ _~,,;- l l (Cir. Sun. 64,980) - .s - 26 % ~ 2 i ."/' :.R' l J$l -;A s ,i .~ l' K S' 5g '^ 4 ; '= i l 4- ~4 . f[- .-f ? -- ~ fhi ..hll <, 7 g *., , ses -- w q y "' t 3-2'Y Y k'* ~ .[ ' ' d CarlHalvorson, chairman of WPPSS executive boar. .t
- f. y erminating N-p! ants isn't Cheap R
hasd ken and the 'tions Halvorson said.,
- E Termuutmg two multi-billiciilollar'iruc' fear piants
its d He said the first wave of lawsu ~ dec6nd wave has7dt'. Numerous cia Wash'mgtonikIbifch. 2ebp[ykslem deSd'- l l have been filed,he said.;.WPPSS has ' se cheap. %nlanuary 1982 it. wanted nothing more to do with o costs a move prompting criticism. S broke and unable to defend itself," Halvor plants 4 and $ in its five plarti series;. i b ds sold to -hst who will pay for the $22fbillion m on..g 7me- "If it gets worse ene and the plants is now at i1un: tin cottrt.AININGLEQUIPMENI at the .He sasd the idea is; Cc thing will come down frum heaven or ..it De no ' 32 milbon a year, according to Carl Halvorson,of the WPPSS e; 4m j i hed calls from t.MALVORSON SAID NE gets angu s k free gg warelpuse holders of what were supposed to 4 535jI)0 a month rent for a Pasco,Washa ll E $100 million worth of equipment./100 a month to Westinghouse Elec be paid," he sadHalvorscn said he wouldlove pt" two,turbme generators atfPittsburgh facil-I ,3 re-elerly callers in touch with t!se utilities that are i)300'million worth'of wg to pay off tbe M. -- - y s3, i ,8 3MI),000 a year to insu t abou s. E R.S Wggfrogn,,g 9)qpycs-_ I pment. m. - ~ ~ -
k d 8~ ~% " j espite week o'f ba61 news, f.h. MD C# ew e d,,4 c. Q ha.irman remain s opt.imistic j d land-based heavy construction and . O Mse, WPPSS will never be able to land development f.m. A former Salem resident, he Stories by MARTIN ROSENBERG sell bonds to finish plants I and 3,he joined the ll-mernber WPPSS execu l_ Photos by GERRY LEWIN Construction of plant 3,two. thirds same m ms said. l c sw firushed, was suspended last month. of six new outside directors.THE WPPSS k t PORTLAND - As the WashingtonP: ant Iwas mothballed for up to five Public Power Supply Systerr rises orinlis, so goes the economic future of nally stemmed from a faulty man-a yearsin April 1982.Only plant 2 currently shows signs 4 the Pacific Northwest, according to c Carl Halvorson, chairman of the of life, with fuel loading stated for ( PSS executive board, light And Halvorson is optimistic about "EVery time you turn your e i l IN A WEEK that brought bad fi-Vou're naying for a -f moth. nancial news to the beleaguered. Onin Salemf a r part of those three (unfinished) WPPSS, Halmson prdctder" N of the system s five plants will be bmusht on line as the power is need- ?? WPPSS failed Tuesday ta make a n'{gg{g* ? a ' 5151i nullion monthly interest pay-overseeing development of five nu-6 ment on two terminated projects, }- C. next fall and startup planned forclear plants,he said. plants 4 and 5. Moody's Investors Service, a New February - about five years behind The problems were compounded when an Oregon court ruled publicly York rating agency,last week sus. schedule 5 pended its rating on 56 billion of Halvorson said all three plants areowned utslities did r:ot owe a penny'v d will eventually be com-towant plants 4 and 5 because the, tends used to finance plants 1,2 and3. even though the bonds are in. nead lacked authority to enter into the directly backed by revenue from theTHE FINAL COST of plants 1,2agreement to build the plants Hal-pleted-g federal Bonneville Power Adminis-and 3 will be about 513 billfort, of vorson said. Washington utilities balked at which W billion has already been paying on the bonds when ** "r Ore-THE SUSPENSION' reflected the tration. raised,he said. aid. i The unfinished plants are already son counterparts refused, TROUBLE agency's uncertainty about WPPSS*abibty to cover its plants 4 and 5 'be l clouded the future of plants I,2 and 3 ~ he said. "Everytime you turn your ~ in the eyes of the financial communi-lightonin Salem,you're peying for a 'rfalvorson said plants t and 5, built debt. l p. part of those three plants " he said, ty, he said, turning problems.into a - 'y 45 utilities, are who!!y distinct f the federallionn- ~ {. Administrationbudget-, crisis.The tragedy;he said, is that' the from plants 1,2 and 3.However, many of the B utfliti,es. .Orns; plants 4 and 5 bonds could be paid off 5. ,are refusing to pay for their share of ville Pcwer ic ,k a few years if Northwest electrwers f bonds sold to SL25 billion in bonds sold for 4 and 5, restricting the systems ability to paying offits shareBanan flnance plants L3 and 3. - -..-(ONSUMERS IN the}orthwest 3. ? ) ) by mo'st Americana. ,5 11 pWhen WPPSS firushes. planta 1/"I -WPPSS* salvation depends onleg-Qill.afrsisdirderthfeet the1(s %
- J and 3,it will find a " reasonable triar.
$ ds, talatforderffiktRrg It"yfAeptare. ' bankruptcy sededt1My-Byipadect sshroustrBPA'intes for t e nyears, whethe h aid. 7 ..., p,. 3 finished,he said..Anyone who has any ideas of'not. Califomia, Halvorson said. Such a proposal failed to pass dur. ing the recentfyloncluded, session of,d *dshing the plants - it's sheer, sni, WPPSS che '.,. 3.c 3 "s,la president of Ital.,-rbis thissis gin , said. .. g. ",, ,.. g. the Washingtorr Legislatuk:
- fliALVOR$0N said he itconggt "
gir WW"]5'i*E"0'0 *'h'EkW "*E*""?9*tW's.*m.:.MfWM9E*T5i l s &(legistatiod ir(frbe as the - ? L A
nsidering m thballed a year ago. But terminated, he a core-entering reat estate, "It's nice to have an option. . they're still paying all that itIh* R*Kt " money and there's not a bit of But for a lot of these guys theyelse.I of 1,275 Satsop constructionI said he's tired of playing (pdl do something they don t wanorkers laid off last Tuesday. '1he layoffs force workers to don't know anything I work getting done. As far as d t Pan concerned they really cre-They're in a world of hurt." 't to do;Turman smd. " he ate a monster by requiring all-Wetenberg said he doesn't . anapolis race driver."When the job is over, guysj ogg,s a sad, sad situat qu,get on thg i . jump in'their cars and race to f sam. Pif y: the near est work site to wife and kids be-l 35;, e. ynip n foreign couttr l$as te eal proh-to race and is staying behindin decisions. It causes r don't know," Wezenberg said. we help our own first.They can d ti e ,1 said, he's there s nobody to boss rball out Chrysler and New to stay put in his East, DN"But Wezenberg, the f ather of York City,why not WPPSS?" hopesof findingwork. 8"Ym"e-Many craftsmen have high ' ig Another construction work-i tailed it for another job. Don go ng ovid. three sons, sant he,a not go n er, Mike " Jerry" Clark saidI la hon te,' Dennis, a spokesman for Tele. Olphone Utilities of Washington, in t,h,e Ieave despi e ins pink slip. ch work any ..We inoved up here (from "There isn't mu,H to @ id. "lle*E goingwisdom, the California)inl'.s77 for the great unemployment ,, g 3 the Elma, Not thwest. Cah;fornia s got the and see how ' which serves ) McCleary and Montesano,said to give me the e 0 discon ; knowledge and the direction.,,g,s the lack of stability by weather, treats me." ahls employees took 10nect orders in the five days af, Sunday: The Olympian's busi-l from town to town that P""Nberg was in the con-ness page tooks at the fle. uncial ter plans to mothball the Sat-sop plant were announced due rnov ngs Turman. "You're not i fallout of mothballing the Mat-Wezen i y struction businessin C.diforn ai ut af ter the move got int sop nuclear plant. l h tofinancialstraitsof theWas. bot er J Jn a c committe Ington Public Power. Supplth',, community. You,re a gyp estate. When the snarket fell b "I've been going from on[ei Turman said he'll consister u,.m,sfg,Q,j g A ;,j td SY-h S i ns just to g ,,,y, o job to the next for 17 years, Turman said. " Pretty soon the switching profess o Olympia area, g g wife ays I don't have another. stay in the And he's angry that the craf t py, g.,,, D the first to getn nuclear, ; po,, s k . move in me. And the kids loo at you and say,
- Mom's got a: workers werehome and you've got a home,' the og,yggp t ggt.
4h OLYllPI A, if AttiillGTON i l d 1 where's my home?"' y"All the clerks are still out g Turman,35, a pipetitter by "tra there," he said. "There are two ISYEIIIIIC - 27 ',923 live' paper pushers for every work-: er. Just like over at (WPPSS) said the StjllDAY 29 S9fa i l profession,or ' " boomers" velers" i from one johto the next. 4 j i j h "These nuclear power hous *,, es, and Pve worked on seven of l them, you know the job doesn't. 'i last forever," Turman said. I i " And sometimes the jobs even ' shut down before ticy're done. i i f l ~ 9!U fIh s ~~~ C I I,
G)psy future afg&I L flit, he wint ta work et Satsop plant one at II:nford. There twa years aga. m M paper pushers Now that his job has been nioney on them is so flaky. They're committed to buiht it. am si idering ng even thugh it was in thballed a year ago. Hut. terminated, he's cons HyMIKEDAKLAND then backing out of, wor re-entering reat estate, OlympianStaff Writer they're still paying all that "It's nice to have an option. i e minutet . Olympian Bob Turman, one it the next*" money and there's not a bit of But for a lot of these guys they ? of 1,275 Satsop construction! on ' w'orkers taid e" last Tuesday, {. The layoffs force war,kers to t want work getting done. As far as don't know anything else'! said he's tired of playing ind! do something they donPm concerned they really cre-They're in a world of hurt." i ,, to do;Turman said. atet a monster by requiring all- " he l anapolls race driver. "When the job is over, guys.y,,gg.sa sad, sad situation,t on thy road ; that} paperwork'" Malwright Itink Wezenberg* nmen can s sM . jump in their cars and race to [said Pli yog ge d kids he-l , 35, Olympia agreed' hose
- the nearest work site to get on. andieave [h, e wife an;the hiring list first," Tur N" Jeepers, creepers, why can t co-E E'"" '"
f What the helt all t i " " # "" #3' eal proh 'said. This time he has refusedto race hnd is staying behind in i decisions. It causes r don't kn,ow'" WezenberK sa we help our own first.They can nobmty to boss , bail out Chrysler and New items."This time Turman said, he,s ,,, en s hopesof findingwork. But Wezenber g, the fathe* of York City, why not WPPSS?" to stay put in his East. Many craftsmen have high ; arand anymore. Another constr,uction work-i talled it for another. job. Don go ngDennis, a spokesman for Tele 01,3n[ecided id~ thne sons, sam lje,s not going la home' Y ,,gF, toleave despite his pink slip. 1 ,g, ,,3 g,gng , We moved up here (from ,,There isn,t much work any-phone titilities of Washington, in t,h,e Lordhe's,m,,y prov where, f guess I 11 have to stay to give me the wis, dom, tIje California)in PJ77 for the great. Northwest. Californ and see which serves the Elma, ,g h,ow unemployment McCleary and Montesana,said e d ection. . hts employees took 00 discon knowledge andthe irIt's the lack of stability iy weather, but it's got too inany g nect orders in the five days af. - Sunday: The Olympian's busi- .ter plans to mothball the Sat mo ng i can ,,You it Wennberg was in the con-ness page luoks at Ihe financial n t0 I#P I Iallout of mothballing the Nat-Jn a church or in, struction businers in Californiat into real sop plant were announced dueto financial straits of the Wasi. bot ser s f. l commitled sop uuclear plant. 2 hut af ter the move go ington Public Power. Supply IN* #" *'"Y"llI" Y ", estate. When the market fell 8Y,, d Systeni."I've been going from one: just to Job to the next for 17 years?'l Turman said he'll consi er ' 7./,,,, Jy,g,g. in'eci Yn r Turman said. " Pretty soon thel switching professions f e w,m,,g, g e i a wife says I don't have onother. stayin the Olymp a are.And he's angry that the craf t !., ra g s were the first to get p, k . move in me. And the kids loo k i QuLeh ar .at you and say, ' Mom's got a; wor erhome and you've got a home,' the ax when the Sa Of,Yf!PI A, r/A",tIIflGTON yla3 was mothballed." All the clerks are still out 01,YL4P I Att - 4 $3 4 t where's my home?"* Turman,35, a pipetitter by "tra there," he said. "There nre two EVET)T!!G 27,923 live' paper pushers for every work-: er..ittst like over at (Wl'PSSI, Stiil said the profession, " boomers" 29,S % i velers" or from one joh to the next. "These nuclear power hous '.,, es, and I've worked on seven of them, you know the job doesn't, said. last forever," Turman l "And sometimes the jobs even l ' shut down before they're done. l . eg.
a- ~ de.neoc i "o*er,-
- Q.
Pege.. .. s
- dW
! WASHINGTON Y 3 S~R57TM w. ! 3'l 1983 1. 71,603 SF. l-6,21,47 4 d neiR M T.T M fN. ~ / 1 "SSEdehedea ay of reckonin9 near /.g 1-. og.w 7". d e and q p., ~ can declare the entire debt u move gMM;;- W... 3 can able.The creditors then fly against any and all assets. i ers of jay's decision by the execut vePublic fe h lders gW ut many of the bond o a Plants 3 X /. card of the Washington Plants 4 and 5 also hold debt on h est to do 4cer Supply System to mot -lant No. 3 for " - c C. 2 and 3.Itisin their bestinterenable these opera-fg nearly =v be wer cannot utmost to me 'lin th2 n:rt 30 days, leaves on yctively theircompleted projects to beco l %j c d* p y.ars, nue-producing. nd the >f the five WPPSS plants aercent com tionalandreveAt the moment, Wall Street aing to collect $ 3% .ed. But Nos. 4 and S have oeen ter-mothballed bond r construction. the . ant No. 2 is over 95 p against .h.F k,.: moves M M. . billion from lants also bring down. However, if their
- ated, No. I has been built, they othballed.
for WPPSS two terminated p additional the two plants still beingill be trying to collect los- .No. 3 is about to be m Cach day that passes brings us c jects inter w$4 or 35 billion from two more pro
- to the day of reckoning ants 4 and 5.Today is the deadline ign any pay with no revenue, a prospect even more j
r making aninitial st5 million may l bonds for those Even though todav's deadline uncertainof success. stillis a h 4t paym:nt on t e bring technical default, there i liants and there is little s owed to payment is still Bank, the trustee, and the Ent willbe made. If ths payment is missed, there dholders, can little time. The mical is due a 90-day period before Che first payment to bondholders enough' gleis so com Chemical July 1. Chemical Bank has
- 3ank, trustee for the bon illion sem-
.s reserves to cover that $94 m crunch-
- taka action.The legal tan is hope-that any early resolutionh r tech-h lannual payment. Then t e h no fur -
less.That makes a default, eit e would come next Jan.1, witavailable for payment to pl:1 ble. nicalor real,almostmevita such t no Until now there has been interd ther reserves The Leg-bondholders. -Obviously, many conflicting thing as a partialbankruptcy.a partial,or in of-islature failed to.authorizebankruptcy of a that failed toJ the debt is definitely a pos / might have prevented the ffects project-by project, ests i sin his' e though Gov. John Spellmanget agree PSS from defaultononesegmentofWP-d Fri-l remaining nq the onto The Treasury Department sees recent attempts. ft: wing over ntin this. Thatis precisely whathappene role for the federalgovernme plants. with Plant No. 3. A Washington 'Sen. Henry Jackson i anal-to ball us / Bonneville Power Adminhtrat onof thelegal day in connectibn says Congress is in no mood e closely / and out.Therefore, itis up to thosInvolved ysis concludedthatbecause m the debt onWPPSS t among / - difficulties stemming fro two tertninated plants, themselves, and forcing t e th) ld be unable to go to the bond mar-ft capa-ing of the only two projects le finitely a; / 3 ketto getmore money for No.. ble of producing revenue is de t standingdebtof $2.25 billion. ncThe two terminate cou I luding counterproductive move. . _....a ld total laterest.over 30 years that woubondhold- $7 billion. Upon default the _9 p. Q n x -. - ~ ~ m, v,, 'N+
- Wmw..,.
'Ne-, Ya, Y'9m
O / NuclearPlant Contracts Voided, wwp,m WA SWINGTON. o t. 20crs Raising Concern in BondMarkets me gn t ,' IE7 YC'.I' 't.T' JUN 161983 SyMICHAELQUINT" surprised and dismayed" at the ! U,,.,, ~ ~ . The Washington State Supreme d,ourt court's dedsim. He said me bank yesterday dec!and invaud contracts that bound local utility companime to N cans o protecting j !.!0?.r:!3 - 041 Mo Ide " Chemical ' EU'IU AY ~1 '33 e i77 pay off 32.25 billion in bands to build two Mr. McG!rt said that i nuclear power plants that were never would recurn to the Washmgton courts Doubts about the bonds for de finished.. "tp assert fraud and cetract efaime, fourth and fif2 plants have re'fuced fbs the full amount of the boods" ' the valueof the 35 btillonof bonds that A12augh 2e d is certaintobe against many parties, including off1- ' were issued for the three other plants, b cials of the supply syetem, officials ofthe utilities that signed the centract appealed, it heighteced )sthe tracts with Beneville. nation's bond markets that might Eileen Titruuss, a vice president at be a default on band payments. In the with the supply system, and the attor-aftermath of the court decisia,securi neys whosaidthecontractswerevalid : the brokerage house of Drexel Burn-ham 1.ambert, said that the latest ties dealers said few of the bonds could tmderWashington Statelaw. Because me supply system is the court decision Inade it unlike!y that be traded, although speculators were country'slargestissuerof tax-eaempt the supply system could obtam financ. offertng to buy them at only 15 cents on bonds, its problems have become a ing through loans from banks and in. the douar. cause cMbre in a market where indl. surance compames that it was seek. TheWashingtonPubucPcwerSupply vidual investors buy about three-Ing to complete the thrd plant. System, creatsd in 1967 to buud and own fourths of new bonds. Some analysts are fearful that large Different Vlew Taken nuclear plants in the state of Washing. ton, had reued on the contncts to as losses on the supply system bonds By finding that the contrsets were sure that its bcmds would be pa!d off, would turn investors away from m*nicipal bonds, including the genersi. much differect view of de contrsets even though it had halted work on the ob than did the utilities and meir'awyers plants. The utilities had planced to pay fa d several yean agi Mf h beds wim remue from elec-all over the country. Supply system Fw exampk. In h occial stato tridty generated by the plants. But bonds, while tax exempt rely for ment fu sold 6 Sepm2W their contracts specified that they wers repeyttent on the revenue of the utill-1980, lawyers at Wood & Dawicn, in obligated to make the payments even if ties-New York City, and Houghten C!uck 2e plants wen aQunt and een was Slight increase ln Yleids Gougblin & Riley, Seatt:e, said the no electridty to set. N supply sy 's problem has agreements between the local utstices j In its 7-to.2 decision yesterday, re-caused a slight increase in yields an1 the suppiy sytem were a " valid ' leased in Olympia, Wash., the Supreme needed to sell other bonds backed by and btnding agreement." In reactung l Court found that the utilities " tacked sales of electricity, but has not spread that conclusion, they noted that "we have relied upon the opinion of ccun-i authertty to enter into this agreement." nodcesbly, even yesterday, to issues Jel"foreachof the;4rtictpants. lThe 40 page decision, written by Judge of r -teandlocalgovernments. The lawyers also added standard The decision yesterday overturned l' Robert F. Brachtenbach, said that an enrun judgn2ent by Judge H. b !anguage saying dat & enforceaM1 Washington State law allows the local seph Coleman d Eng County SS ity d h ceacts may be subWt m h*Ina the validity of judidaldiscretion,excerciseof Wash. utilities to purchase P0"er and to own perior Court ='Ju@ bim's ded. ington State's police powers or bank. generating plants but not "to guarantee me caracts amher party a wnership of a generat* s6an was appealed by the utilities, ruptcyproceedings, ing fadlity in exchange for a possible which are under pressun frotn their In a mmerity opimon,. Justice shareof any electridty generated." consumers *. Residents of the Northwest pay n,5, Og 2' The guarantess the judge referred to some of the lowest electric rates in the. nidpalities not intended by the 1.e515-were the promise by the local utilities to because a n latury " Justice Robert F. Utter also
- buy electridty produced by the power dissented fmm N maw and said, su2ority's plants, or to pay for the Power %mstration, a Federal The decision here today may not free plants if electricity was not produced.
. However, conartwr electric "municipaH*1es fm:n au potsialcosts Construction of the plants.was stopped bills would rise sharpty if the utilities in even the pasent case,wtB bar them were required to pay off the bonrts for fr m potentially advantageous con-Cassinued as Paes DS, Column i.._. the auclear plants" systemtracts in me haun, amt win snake n- 't - Castissed Freen Page A1 The supply originally d futun pmjects mon cost. begause of cost overruns and a dectice plannad to construct Ove nuclear Y' la demand for eiectridty in the North-plants but has cut back its plans sharply because of the weaker-than. west. The decision was a blow to the expected demand for electric power Chemical Bank of New York, which as and the higher-than. expected costs.*, trustep for the bondholders had filed One plant is n?mt finished, construc, suit in Washington to force payment tion of arater has been suspended ou,2e bonds. The bank has on hand and building of the tturd has been the money to make the next interest slowed. ~ pmyment, due July I but has not col. I letted the money for future interest Q6M* pajments. srtan McGirl, a Chemical Bank vice president, said the bank was ---*--w----,._--..w
L t J rift ertNp WASWfMCTON. D C. 2CCC5 .e . Front Edit Otner rege..rege.. res. _ LI?.1 TA3::::* Z ON, D.C, JUN i4 E MORNING - 534,500 SUNDAY - 800,452 Whoops l Who loses Money?i By Robert J. :-amueiwn coming calamit:.es. It emphasizes in the early 1970s on five nuclear ' The br kar wa ti:m of Shear- , happens when "indepen-plants. the demand for electrici:y - what wu A:n-rican F.xpre s :.ow runs de!st, government authontie=- m theporthwest was irmr.: at on y I sely accountable to anyone about i percent annu.:!!y inq 'he ti'is aut-rti--ment: -Strmgnt An-and empowe.ed to issue tax free plants', costs were proycted at, r.wrs to the.m Lt Aded Ques-tions. The. hhington Puotic secqities-interact with pro 6t-n6 bilhon. l seekmg underwriters and bond. Now, growth has lowed and Pinar Sappiv svar m." To the - cost estimates have hueiwed :o e initi.it+d. tne WPP: 6 o, known as ranng amqs. And, in,this, it is hardly excep-324 billion or more. A a re uit.. And it is a whcops. With 58'.j tional. States and localities have two of the reactv. W and 17 ' Whoons. luxuriated in an icgenious expan-percent comple'ed) have been hillinn in outstanding tax. exempt si n of tax. exempt tinancing. L'n-canceled. another two o33 and 75 bonds. Whoops threatens to be-derwriters have eagerly promoted percent ccmpleted) Ime been de-l come the largest hanicruptc'f of a the expansion that has stretched. layed and only one nearly finished j tax exerr.pt gowrnmental agency the compatency of rating agencies ; plant is scheduled to begin oper.. in l'.S. history. Little about it. is. t provide reli~aba. Judgments ating early next year. straight; must eveqthing is crook- - Meanwhile, howeser, Whocpu ed-not as in criminal but as in contused. uncerti!n and compli-KONOMK FORS is=d r=untains d t3m=9t - bonds to finance con +truction. For, cated. Whoops pnimised cneap necie-about bonds' underlying worth, if. the canceled reacturw. these to-taled $2.25 billion. The deb >ed at power sud delisered expensve. the Whuup, affair checks these reactors have consumed another 2 partially built plants that produce tendencies, it may have some r,. 83.7 billion; and the nearly com,,, nothing. But the story's moral ex-deeming value. pleted reactor, $2.4 billion. Nor. tends beyond nuclear power. Pri-But virtue stops there. Already, mally, nvenue from the reactors *t vate utilities have experienced electric bills have risen in the Pa. electricity sales would be expected - comparable nuclear disappoint-cific Northwest, and possible con. to repay the bonds. ments without triggering equal sequences stretch further. Some It is here that the plot thickens. financial debacles. members of Congress are suggest. becam no one wants to be stuck; What Whoops represents is a ing a federal rescue, which prob. with the resulting 1%a The, breakdown of. the normal disci-ably would cost billions. And aome have been flooded with ' plines of business and politics that finance specialists argue'that the courts,ts m the legal equivalent of,. lawsui prevent routine errors from be-luces to. investors could disrupt musical chatrs to assure that. municipal bond markets perma, someone else in atanding when the'. Samuekon writo tryu!arly on nently. bills arrive. economic c/jairs for National That, in the end. is what Vournal, from which this article is Whoops i all about: Who loses Cyrus Noe whooe newsletter money? When construction began See FOCUS, C8, Col.1 - reprinted. x .e CN. ~~~ " * ~
l genv.k kr $ f %. w l5
- ll ?]
But on available evidence, the case for fedeiai FOCUS, From C7 Cleanng (*p records the legal brawling, devribes. intermnon is weak Abundant Wro puuameans that the L the mountine litigation as indecribable. Whoops , busi, ness) rate: remain less than half the nationas is a municipal corporation, which ent%s it tu aWrage of S cents pc kamatt hour..\\fany orig-issue tax-exempt bonds. But private and public . mal bond imestors pt, baNy have.old at large o utilities-the biaest is the federal Bonneville losses; the bimds now are prime vehic!cs for spec-Power Admichitration-asured the reactors' tl-ulation. nancing by penmising b pay for them re'gardless As f e the mum,cipal bond market, no o'ne of whether they everdeliveredjny power. 1 Lt surprisingly, some utilities now are chal,knows what will happen. Ntrer saw a default orbankru lenging these contracta in.hhington, eid Ore-Dmms Aen a &exd Burmiam m. gun courts so far have rendered omtlicting opin,- vice president, dissents. She says that some inter-ir,ns. Althwgh Whops has missed a menthly pay-est rates wMI n<e-pnmanly for Northae-reer ment to bondholderi tru. tee <. the nest semian-ymsers-b tt there w,dl be no general intermp. nual pasment to tne hondholders therurcive, is liker to be made inc the tru3rees' reduse 4 tion of borrowing.^ "d I"'f' 'f' D""l' h'"'!!S If" " III' " "' ~ The inve tmg pubiic-After that. no we knm. If Wheaps went : tinely deplored conflict. heavily depends on tae opm count. b.mkrupt..nould ddit r4 pur ue the uttiities? '"? """ '"d "Of"*"'. Their wi :um. The Boi. nevi.h P. wer A&:ani :ra: aid The clo.er meq b3 neen corepicmA wanun+ A We a (lirnax cer.et de areat d eral help. Rep 6cte Ha,er the pre <cre nor te. puche clamor (plus bondholder <uit:o may emu 4 nserr iR.fdahm afread'y their attentio better. 'vants the government to buy the bonds at their & merdue in a reexamination by Congts4 .\\! arch I marker v!ue. .and the states of the irmnense variety of quasb Combined witA electricity rate increces in the 8""*".nt orgamration, and acavitte< that now e Northwest an@he extra coat will be si billion.xatic; Bonnevii!e Power funds,. beneu.t num tax. exempt ce preferential interest That estimate could be low. The honds' prices l rates. Schook highways and sew Hansen tigurer t already have dropped sharply'isome = ell for 30. tuted.the bulk of tax exempt borrowings:in percent of their original vFuet. and Huwarrt Sit.they were less than one.tiith. Congre-* rer. sice president tbr municipal bond research at '
- tor everything from housing to student lean 4.
Thom.on. lcKinnon, v.3 ime> tors wu!d want It. gotten out of hand. Someone was bound to \\ more than these depresse'd values. go whoop 3 Regard!e<3. someone is going to suffer. The &rtliwest aluminum industry (which repitents about 30 percent of the U.S. totah already com-plains that rising business electricity rates increas, ingly put its plants at a competitive disadsantage 4 with Canadian produced aluminarn. Farmas de-pendent on electricity for.irrigati6n pumping ~ face ', , a similar cost gicee:cl._ a 1 .,. - -~-
[ T troubled-nuclear project kt j i; eaves fallout in bond mar e s cance far beyond its own regional dimensions. It isbei [ T dy JAMES Rt SSEl.t. Whoops" bond saga, with a cast of of the entire concept of munic pa i t relationships. wed tmanc:al uw cnaracters numbermg in the hundreds of thou-the sanctity of contracCities, counties and states a aThe great " $ The tension is mounting, the stakes are high, and pend on this type sands.ls nearing a showdown. Please turn to WHOO l ;ee oute:me is in doubt in the case of $8.3 billion in e y JJ g e g encs, e sold to pay for a grandi-WHOOPS / FromiF# nc. - t rc p V saunicipal bonds that wer -eee and now troubled nuclear power development in } of dollars worth of pubiic works. "If at any time Interest is not N"] ' f*
- N thePacific Northwest. "
Pinancial fallout from the regional profect of the paid on the bonds, there will be a ~- Weakiiston Public Power Supply System has spread large credibility problem involving f it .i t a
- 8NM throughout the land, since the money to pay orcame from countler.s investors in citie HER4'.D municipal bonds in general." ob-of New York's Chemical Bank, the trom coast to coast.
WPPSS bonds, which acquired the acronym trustee for the immediately threat- " Whoops" early la their 10-year history even before ~ ened WPPSS bonda. that term becan e descriptive of their character, are Jim Reilly, editor of the authori-E""MT - 5 3 2, d.M ' probably the most widely owned municipal depubu- 'tative Fixed Income Journal, was even more emphatic. gations in history.Small investors by the thousands bought them. So "What is happening in the Wash-ington situation today puts all of b 2g g did giant insurance companies, blue chip corporationssad gilt. edged bond mutua "This could be a dangerous domino are limited to the safest things ca the market."A disproportionate number of the bondholders t bonds ' reside in South Florida." said Joel Wildman. manager feelmg the result. If contracts can of two local offices of Donald Sheldon and Co., an in-vestment firm active in the buying be cast aside. our who*e econoce The WPPSS contracts were c! ear WPPSS bonds. Joseph Huber, vice president and bond specialist eneugh when they !d pay off the were drawn. The 39 signers wou h at Southeast Bank. agreed."This is a big investment market, and it's !!kely bonds regardless of what happened there are large numbers of bonds held by investors in in the course of the massive cuc! ear development.' this area." he said, aut as construction costs soared d the demand for Credibility problem Bond issues that provided the money for two of above budget an er dec!!ned rather tha's in. the lil-fated WPPSS projects have been threatened. pow creased two of the five plants were with default as a result of plant cance!!ations and a abandoned and activity on a third refusal by potential users - some 88 municipalities was stopped. Beset by consumer complaints and legal uncertainties and ut!!!ty companies in all - to pay. lore, near:y a!! of the 88 The remaining issues appeared largely immune to tia crisis until Standard and Poor's Corp. removed its gawould-be users reneged on their rating from them, contending they might get caught agreements la the crossfire from courts legislators. city govern.Isolated as they are in the far corner of the United .ments, consumers and all the other players in the States, the quintet of nuclear power ~ northwest The plot thickened late Friday when the" execu. projects themselves hase attracted - drama. little attention elsewhere. It is the tive board of WPPSS ordered the mothballing of itsproject No. 3. the fou wide distribution of the bonds that has made them a matter of national ta be abandoned or delayed. This new development brrught trading in all the Senators and congressmen from. WPPSS bonds to a sudden halt. a situation that. concern.the region are trying for a partia seemed likely to continue until bond experts assessthe latest chapter la the u . federal balout. The Washington State legis!ature is wrestling with problems and, of cuur:4. the "Every bid for a WPPSS bond, no rnatter what undertaking l;one sour. h project. has been pu!!ed." one trader declared late t ecourt system has been flooded with WPPSS relatedlaw suits. FrWay$nples and confusing because of theimmensity 6f the enterprise and all the people and lastitutions,I;volved. the " Whoop Co do
9 ^ i ~ declare bankruptcy. "It's another Ptna Cen-Washm.gton State Justices Say Un*lm* *es = tr,1.,he said. The magn 11ude :s inc, eel. ble. I thmk it's gomg to end up in some kind - Not Liable for $2.25 Billion WPPSS Debt
- *"mc%'e*C;'% J In Portland. Ore.. Portland General Elec-corne out whole in the event of a defa tne Co.. an investor-owned uulity that l That is because Seir bonds are insurai ty -
doesn't have an interest in units Ncs. 4 andone of the nation's two biggest bcnd mnt-By CAaars Dot.o
- 5. called the decision "ternble." Portland ance companies.
suttagemnt Txa wau. snm som-Genera!is among those who believe that a The msurer. Arnencan Mcnicipal Bond O!JMPIA. Wash.-In a major and unex-pected decision that could lead to the largest WPPSS default will hurt the borrow'.ng abil-Assurance Corp. is obliged to meet 5 6.4 mt!- mur.icipal default in history. Washington sty of all utihties in the Pacific Northwest. hon in pnnetpal anc r'amst pannents on James Durham, etce president and se-pPoyect Nos. 4 and 5 bonds in u 11vidual and State's highest court freed Washmgton ut111-ties from their obIlgations to help pay the nior counsel for Poruand General, said the, msututonal portfeuos. It would be 2e :arg-result of the decuton rneans "comnutments est loss suffered by the Baldwin-Cr.ited 52.25 bilhon of debt on two canceled nuclearmade in good faJth can be dishonored by Corp. subsidiary, known as Ambac. In a 6 2 decision, the court ruled that the government bodies. Apparently nobody's An Ambac spokeswoman said 21t the power plants. utillues lacked the authority to enter mto word is good for a'rythmg anymere-even if ~irr.g.t'cf a defa.;t "*ouio oe retanvely me. agreements with the Washington Public tt's in wntar." nor.' because the payments would be Poww Sapidy Systern 2 Md tk aucaar Mr. Durham called !.te utthties' attempts spread over the maximum 35-year hfetime plants. The ruung overturned a lower court to avoid repayment a " sad commentary." of the Whoops bonds. Inically Ambac weuld decision that held that the utilities had to He ud. "When they entered the agreement, have to make interest payments of only $10' nulflon annually. pay for their share of projects Nos. 4 and 5. they had every intention of payttg. But So far Ambac hasn't set aside any tash. desptte cance!!ation of the plants in 1982;. when things got rough. they went lockmg for usm m com a Mmp Mad Wq Weal ways m gn wt d paggr Pletse Tmt to P1ge.N. Column f said S A Wil i ' ch rma o the Portland General holds a 10". interest in Connnued From P':ge Washington State Senate Energy Commit. project No. 3. Mr. Durham said the court's "we haven't been nonf'ed of a default." the tee. "and bankruptcy is tr.uch more decision shoddn't affect separate arrange-rnents for the completion of pmject No.1 sposeswoman added. Karen Hess: g. Am-likely " Obtaming payment from the utiliues. but "with what cour's are doing with con bac director of research, said dat "It wou!d , atuch are responsible for about two thirds of tracts these days, who knows what will hap be dt:Scult for the people :n the Nor2 wait to let %toops go under" because other the 12.25 billion of debt, was WPPSS* !ast pen?" he asked. / j major stab at avoidmg default. Without pay. In Seatt'*. Michael Mines. an 4tforney Northwest bond tssuers would be hurt. i ment from the unlines. it is unlikely WPPSS for Chernica]. said he was "still in shock" Ambac said it also has guaranteed to Ican meet its obligations to bondhciders yesterday afternoon following the ruling. He meet p4ments of st4 tmilton in princ:pa! Bids on a!! WPPSS bonds were halted , said Chermcal's lawyers will Sie a mocon in and inwest on %toops project Nos.1. 2 and ' across the nacon. yestertay shortly after the courts dectsten ' a " couple of weeks" asking the Washing'on 3 boads, which weren't covered by y+s er-Supreme Court to reconsider its opinion. day's court ruling. was announced. Mr. Mines said Chemical doesn't have Arnbac's prircipal comoetitor Munic: pal DoctJd Mazur, managing director of WPPSS, sajd that "the dectsien can only be the authority to neMate sett'ements witt.
- Bcnd Insurance.usottad m said it hasn t Mr. Mmes said Chemical intends to "re.' insund nocps Ws u. won t k ed the ut!ites involved in the case.
devastatmg " and caj!ed it an "incrxilble" cover whatever we can recover for the band.; by a defaujt. However. Leon Karvea rullag. He said the WPPSS executive beard we are betng nior Vice presiden,t,. said that was studying the decision. and didn't know holders." He said. " bondholders sete led to very ciramspm in insunng de bonds d what accons the board would take. WPPSS wouldn't comment further, except to say believe those bcnds were a perfectly legit 1 any gewant uni 1 that m mem M that the ruung wouldn't stop it from finish-mate buy. They tbondholders) were badly %toops obliganons,,, including public uuhty ing its umt No. 2. scheduled for completon used." He said Chemical's attorneys plan to districts and towns or cites that are part of study the optaton to see if it can be appealed these districts. in September. However, the ruling is Itkely' to doori' to a federal court.Howard Clark Jr., execuuve vtce presi j#833 JAl#f /. 'A## f) / 0 d"#* WPPSS unit No. 3. Ofacials had been trying 87 this week to get banks to lend money to keep dent of American Express Co.. which colds msmsveae. o c. seces unit No. 3 open. Sen. Williams said "it will 190 rmlhon to bords for units Nos. 4 and 5 Front Ed;t Other said the company "will continue to work be nearly impossible" to get that money with the bond trustee to pursue our case." Page Page Page DC'- Chemical Bank. New York, is the trustee He added. "It isn't going to stop here." Mr. T ALL a,,,., - - *, .......,g h ' .a for the bonds on projects Nos. 4 and 5 and Clark didn't know what action might be tOb EAnERNEDI*$3 filed the lawsuit on behalf of bondholders. taken. g gg Chemical wouldn't immediately comment on i A spokesman for Bortnertile Power Ad-Immistrauen said that federal agency is 20RNDIG - 640,064 the suit. Albert Malanca. attorney for some of the, studying the court's dectston and wouldn't utilities, said be appro*ched Chemcial Bank com:nent on it. Bonnecille has a separate "two or three times" about a possible settle-repayment contract with WPPSS for proj i ment, but said bank offletals weren't inter-ects3 ort f; 2 and 3. Under that agreement. "Bonnevt!]e acts as a " middle man
- between ested in negotiating.
WPPSS and certain utihtles that have a Mr. Malanca said although the uttiltiea-were ere =M in court. "you don't have a stake in WPPSS, with the agency's revenue backmg the bonds for the three plants. champagne celebracon over a corpse. A WPPSS spokesman said it wasn't clear "Ano her Penn Central" what legs! steps can row be taken. "This An analyst said that yesterday's decision suit involved state law and was decided in. Lncreases pressure on the supply system to the state's highest court, so I don'. think we can appeal tlus case." he said. o
/ Court. Ruling Puts WPP.SS At the Brink g,m.yog# *"" ~~'
- m.
. All that is standing between the ' "8 "
- 8* "
By Les Blumenthal 0" -M . "es's..; rose -.-. - Supply system and default now is a 7"".' r w==ome r=; tate c urt mtraining ordu pannt\\ SEATTT E. June 15-The Wash =N bondhens fmm forceg the gA3;.in nox, p,q, in:;trm Public Power Supply System was left without a means of paying ""I see no region.i solution at this. POGT oli the $2.25 billion debt for two ter-JUN 161983 time without some federal interven-minated nuclear power plants today Il0RN DG - $34.500 and the largest default in the history tien, Spellman said. But Rep. Al Swift ID Wash.n predicted there was. SUNDAY - 820ri b* of the municipal bond market seemed all but assund. .See WPP5S. D11. Col. 3 j p l yP1 SS F* *eram* Da on Defautt The state Supreme Court, in a 7 to 2 decision. overturned a lower O-eoitrt ruling and held that public 1 W PSS. From D12' p%m, failed to make a perent t in net n t eit t the express nor implied legal autho. little chance thr congresional assist. mto a cond. nerve fund. a,uch s no-ritiy to enter into agreements to pay 'ance unlus it become a national.tice would have given the suppiy for the plants being built by. problem. system 90 dan to make the pay-The sua tg force payment by the ment.. uter which default could hase WPPSS. The Washington public utilities, hhington utilities was brought been declared and the supply system which were among fB Northwest 'more thaa.L vear ap by Chemical headed tur bankruptcy or recei'.e pcblic utilitiesthat 'sponsered 'tM* Bank ut.%Ootk. the trustee for
- hip-two plants. together tre responsible conos.old te tinance construction of WPPis's only anets are its three.
or more than two-thiras of the bond the two abandoned plants. nmaining melear pown plants. cf, ch one is neari m i C$urts in Idaho and Oreen have Gemical Bank has not yet seen ruled that utilitii.3 in those 4tates are 2e deaw, n but is *urprised and d(s-g not obliged to pay their 3 hare of the mased at the teported results, eatd ' hu been balted on a third. bond de'ot on the plants. The4e cases ' Bnan McGrt. a bank spokesman. The two abandoned plants, one at are on appeal. McGirl said the bank would ask A default is ' wry close.' said the stare Supreme Court to recon-Sats p, west Olympia. and the hhington Gov. John Spellrr.an. 5 der its decision and planced to The decision sent rippies through amend its suit in the lower court to vation, wue tum@Fu wa. unable to mom 6 a year ago after WP out the munie: pal' bond market. a3 sert fraud and contract clairns for which ended the dav mixed after an borrow money to continue construc. initial slump. the, full amount of the bonds. tion and questions were raised about But bonds for WPPSS projects against members of the supply sys-whether the power from the plants No. I, 2 and 3 fell about 4 points. tem and supply system directors. the would be needed. and bimds for projects No. 4 and utilities and' their commissi,oners, ' WPPSS has already borrowed 5-the terminated plants-fell more and qrtain attonteys. $2.25 billion, which, when interest is than 15 pomts. A series of 13 suits aho has been added, leaves the region's ratepayers-The movement of a point is equiv-tiled bv bondholders that allege vi-with a $7 billion debt met 30 years. alent to a $10 change in the price of plation of federal securities ~ laws and As ratepayers realized they would a bond with a $1.000 face value. that tne ability of WPPSS to com-have to pay for two ' dry holes.' they ."This is a devastating decision." said Don Mazur, new managing di 'plete 'and tin' nce the piants was rose in revolt and the utilities in a misrepre< enter turn looked for a way of avoiding rector of %PPSS. which was build-Chemical Bank had planned to payment. iwe WPPSS a
- notice of default-Specialcorrespondent Lauro Par.
d dt bon 5 to f t r con. ttt tion. 'd'II*'.this morgh after the supply her also contributed to tb report.
- .. w
~- ... - ~.. w
~^* ^%w _ + Valuehf ?WPPSS" onM . =
- ?' '
34 ;"4 ..n, i The supply system also faiteit to make a $18.4 milhun payment, whict: 4 , percent of their trading value in less was due Monday, into boral accounts + on WPPSS* mhutdown Nos. 4 and 5 An a month.WPPSS has bold more than gg No.3 .By Joeg g
- stuclear plants; i.hdy a judge's order forced to h 4
i -P-f Reporter sJ - b6Ihon in bonds to fuiance the attree cannot se(, Moody's Investors Service, one projects.The supply system aho sold the Chemical llank of New York, f tem has been told at from tr ggermg the largest munici, j bonde untd the legal of New York's two major securities 32.25 bdhun to pity for construction d5, pal tumd default in Anwncan history, i mess over terminated 5 plants which have rating avecies.. yesterday suspend.ed its ratmas on bande for three' on tts Nos.4 and been offectally termmated. resolved. of uncertamtics con. "liinisk there is a lot of fear PuM6c. Power Supply The bunds for WPPSS* I,2, and 3 cerning the long-term integrity of allj has begn "Because assets of the supply system, and inl back haie," said Howard Si stuclear projects carned a Tnple-A Washington McKinnon ratmg as recently as February 1982, System a, which 'Ihomson light of the rumpeyment under the president, of an analyst who fue e Since then, however, ratings have The l downgraded WPPSS* bonds three bond resolution fair projects 4 ased 5. the ratings were suspesuled," sek! $ rpl ges weeks ago, caused a sharp drop si been lowered and suspended by both esent prob the tradang pnce of bonds for the Moody's aimi Standard & Pours, the cast some of WPPSS* e Craig Atwater, a vice presalent at f lesna la the summer of SNbSitze supply syntess's Nas,1, 2, gnd 3other major ratmg hervice.The suspenwm by Moody's fot. Moody's. was ' also tough oss WPPSS I,2, and 3 are "an outstand- . But . nuclear plants."The pnce for WPPSS* 15 per-lows a string of adverw develop. Mtiody's cent bonds was hovering at just over ments in the trouble plagued WPPSS WPPSS* other securities bonds yes. tg Q value fw myesmas wdtto3, He, l sc day. It suspended ratings on accept a certain asnount of shk. federal- ] par when the magiemaaon was an-nounced; it has since fallen about construction ef fort.Last Frklay, WPPSS suspended buiufs sok! by WPPSS in the 1980s to r m the voiced confidence fmance the Hanford Generating Pro, Bonneville Power Admimstratton s, eight prAnts, pretty substantial for att work on its No. 3 nuclear ptant at ject, as well as bonds for WPPSS. abdsty to go on underwnting the. Satsup, the fourth tinie m the p.ast afternoon" said Esteen Austen, vice l c Small Packwood I.ake hydroe ectn York's Dremet two years st has been forced to h. alt of New [ctors. project in Lewis County.The plummeting bond ratings presidentBurnham Lambert brokerage house. construction of a reactor. leaves WPPSS
- +
The latest drop in pnce means that bonds for WPPSS* projects I,2.with only hs No. 2 reactor under were (l}e sumjor,reaspt: WPPSS was The slowdown f d I I and 3, once cortsidered giftedge construction. [ secunties, have lost more than 20. j'rcJJ Yosfel[Igente, Unc,; y o ~ ~ WASHINoTON O C. 2coOe Front LJit Other ~ Posa Poge Page srATTI.E wt. :.i::a ratt POST-I!",ELLu1EticER, j i 191,206 IAORtlIIIG - ClitID AY... - 233, M M 2 l ,m I i e ' ~ - _, _
/ !WPPSS Woes Hurting Bonds -na,.u.sutbe_m-e-n saag.-, L. wassmorew. o c. :oocs of domg husmess." To reas are investors, underar:ters far irent se: cin.r l P ge P:;s Pcss .a& G s
- 1 O' /)
the state s past two sales have taken out in. I 85 8 8tp V l "O ~ ~ " I e. ~. "- - w"w"- i BY C$uus Dota.s the bonds. General-obligation bcnds are i m a seaff noemr ef Tuewm. senser sowu. backed by a state 5 promise to repay them, ._gA37Ett Ep]Q3_., i j Some people in Washington state are and it tsn't typical for them to be insured. N 4 learning about the problems of having an '.1xal people don't like them buytng the in-201M.D - 440,064 unpopular netghbor. surance because it makes the bonds more . The Sr.ancial troubles of the Washugten,,Jy " says Mr. Kerr. "But back East, it's Of course. some people think wanness !s - Public Power Supply System, a group of five a M seg polm. warranted. In recent years. Washinton ! nuclear generating plants in the state, are Sman investers especiaHy. feel safer state had !!nancial difficu;ttes unrelated to laffecting Washington municipalities that with insurance says Leo's J. Karvetts Jr.,WPPSS. want to raise money-whether or not they semor vice president of the Municipal Bond
- There's a perception in the East dat i
WPPSS, often called " Whoops," is the " Insurance Association in White Plains, N.Y. we're financial donkeys out here." says 1 have any part in the project. The average guy ott the street who wants Seattle band dealer, "Maybe we've earned } , largest issuer of muntetpal bor.ds m the as.to buy a bond doessCt have a staff to sort out l ' bon. One of its generating units is near ecm all the background for him. It goes through it " pietion. One has been mothballed and con his trund that aD bonds in the state are re-struct2on on another may soon be stopped. lated." He says Washingten municipanties I The other two were canceled in 1982. leaving may have to seek out the small investors, investcrs Mth C".5 bimon m bonds whose because some insututional mvestors " don't interest %?PSS can't pay. % tile courts con. want to touch their bonds anymore.' sider who m tst pick 2p the tab. Ce possitti-, Some concerns are takeg advantage of ity af default hangs der the project andAe a efs
- roubles. "Because s :ot of com-ies have stcpped buy;ng :n the state.
hurts de rest of the s.a'e. "We have nothing to do with Whoops ex-pan.ve been getung much better yields cept that we buy power from it,' says Ar]' 2ere." says a spokesman for A!! state Insur-I nold Hartvigsen, treasurer of 2e Port of Ta' ance Co, t. Arge mvestcr. "In a market :ike ' ecma. But we have to pay higher interesti hat, you can demand and receive a better t to borrow, just because we're associated ded" Allstate is a anit of Sears. Roebuca fr ! ) f with it geogtsphically.Some expect the port's expenence to be-.Co' lcome rnere cornmon. The port recently sold Voters Also Affected ~ 4 i C6 tru!! en in bonds to raise money to build The WPPSS' troubles have also affected ] 3 ' new shipping facilices. It was forced to offer f voters, who often must approve bond issues. 1 higher-priced deal than it had hepad for.12st mont't. the E!ma school distnet, which
- Even so, a Seattle bond dealer says an order has a WPPSS stte within its borders, asked
- for (4 million of the port's bonds was can voters to approve a $12 million bond issue so c
celed when the buyer found they had the it could replace the district's 73 year old i J narne " Tacoma" on them, high school. The bond issue was defeated. Supenntendent Dewayne Boyd says a teie-Comparisons With WPPSSAtr. Hartvigsen says that isn't fair. Still, ph ne survey of voters taken l found WPPSS was a major factor. he says he can understand the reluctance.130".There's a growing distrust about bonds I "They've got the whole country to choose in general, he says.
- People wonder from." he says. "I suppose if I were on the whether approving an issue would be the East Coast. I'd be very select.i.ve about buy, end of it, or if it would turn into another I
3 Whoops." He says residents were also wary e tate o W gt a plans to bnng of having to back the bonds because they $1!d rnit; ion of genersbobugation bonds to fear they wiu be burdened with other costs, market in July. "We'll see a pena.l.ty rate," such as higher unemployment claims and in-says Deputy Treasurer Tim Kerr. Althout ]neM h d WPPSS N,g f g,, l f the state's financial condition has dramat1 i t , cally improved in the last few years, some sold to local or regional banks, haven't been r
- people see us tarred with the same brush as disrupted much. Snohomish County Trea-Kiro Sivers says the county airport sm[t haw any trouble sel!!ng 11 mt!Ilon of err says he hopes investors wtIl re-dada r
! alize that the state shouldn't be penalized tends recently to fund repair work. But he just because WPSS ts located in Washing-says Washington municipahs MU face ton. But if mvestors demand higher rates, some trcuble away from home. he says, the state must pay; it has to seu "On me East Coast mey sm! mink wm I bonds at least twice a year to ral.e money got cowkys and Indians out hm. AU W for highway projects, higher education and med as part of Wps for a wh, nsid-c tizens of the state are going to be co other necessities. " Whoops is always going j to be with us" he says. "We have to live \\ t: e.-----~~...-- l' ...-...-.-s,.-
l - e / / JF The %lismi Hecaid / Sundar. Mav 29. Im.... are a conservative. income onented U power to rnake sure that t!'e bond Investment.not a trading vehicle. In t r crisis point was set for payments are made. One way or an. our opinion, the 1. 2 and 3 bon May 31. WPPSS was ex. other, bcndholders are going to get still represent an exce!!ent insest. If they don't, the Pacific ment. I eten believe the 4 and 5's 4 3 fail to pay its bond trus. pad. Northwest region is m trouste and will work out, although there mJy Q'. feal Bank. a regular $15 6 That just be a temporary hangup in the Janu-insta!! ment due on the bond so is the bond industry.Beris said a default on 7" ' x vering projects No. 4 and 5, won't happen." e valued at $2.25 billion d f ed by two power projects bonds would have serious si e e.fects on all kinds of municipal and e Steve Hueglin suggested to W clients of Gabriele Hueglin and p judge's ruling last week de. corporate obligations in the region.Thus, state and local auth) e been abandoned, t i ladefinitely an anticipated have to make good on the WPPSS l. 2 and 3 bonds and consider buy. on of. default, on the 4-3 ing !! they den't have some already. c ) prolonging the agony of un.. debt, he reasoned, "sut for norders of projects 4 and %y t that has enveloped the Farther out 5." he added. "the situation is more j.
- debt for months.
l La smoney in an.eecrow ac.! The bank executive's mesage to stin"it's tough to give advice on the 4 p to worry Jy payment to bondholders. bondholders was notabout the July I semi. annual inter. and %g-to cover a forthcoming.fuly said. and there can be no part. In the hands of the courts." of default until the.eerpayment." Farther out la where the doubt Bond specialists now are saying D t that the underlying lesson from the 3 permirICrf the litigants WPPSS. lies." he sald. cal Bank, bondholder repre.l What's decidedlalegal andlegis, " Whoops" expertence is that le f ives - appeared happy with lative batttes in the "Whooes" a. does not make for a ruling. It seemed to buy time
- fair now could set precedents for' womrt stone safe bond l decades to come, according to bond Whde there are cleat legal re.
D 'I88-quirements for paying off the dert. esperts. "At least 90 per cent c,f those the severe troubles uf the power bonds will not mature until we!! system removed any visible means the year :000." Huber of of economic support for what is ~ past SS Southeast Bank pointed out. owed. b,nd3! pL. When WPPSS Sands were first 3 marketed, they bore the sponsor-8hlP of the biggest names on Wall A protnise to pay I* Street, and the stamp of approval of without power to be said.and Financial,* the premiee rattas agencies - Standard and Poor's and Moody's. customers to buy it, the revenue The legal support for psy!ag them that normally would pay off the ob-lig F41 tor t .a off appeared unassailable. not in prospect. " Bondholders at least for the Now, with a crists situation at So the responsibility f alls back on time being, are suffering no harm" Washington Superior Court Judge hand and the rat what James Lebenthat of the Wall l According to Berts of Chemical one third their face value. whi e calls "a promise to pay, com Joseph Coleman said. Bank. the earliest that any bond. two of the remaining three trade at or high water ** in view of what now is happen. holdtr could miss an interest pav. s12eable discounts. "We have been telllag customers ment is next January. But the ban'k. for a year that everything will ing in t la its trustee role. Is determined to pull out all the stops to see that no Sheldon and Co. " Municipal bonds water." ~ bondholder losesin the long run.
- There is so much confusion and --
so many variables." Berls said. "But Chemical will do everythingg i ) ( l .........s, *'~w n,_ '"hmv., ~"^%.
- - - - - - + A.. 5 e ,% JnMhgence, Jnc. ? ASH!PeoTOPt. D.f". *CCc3 Front Edst Other Pc 3 Po:s Psga !!E7 TCu !!.Y. s ws.JUN 7 1983 20?.NI:!G - l,606,36S (;g,Jfald{igenes, One-waswtMgToN. D.C. toooS squDAY.,- 2 37,4% pren Edt Other \\ ~ ?e; 5 1; ? " relaxes iW N N-curbs ' Whoops' is no joke " ' " ^ ^ " " " ^ * ' ' Financial analfst.s used to chuckle, at the Washington
- f,hjy ju"c'Ib wasu'
[t ,g,3 s Public Power supply System: Its mitials, pronounced "whoope," became sarcastic shorthand for the project's have to be weighed every time the government examines a resctor overruns, construction delays and management problems. They're not laughmg anymore. WPPSS has become a license, the Supreme Court r tied worst. case example, m the energy business. unanimously yesterday. in 1957, 68 pubhc and privata utilities in the Pacific The decision reverses the finding of ~ 3. lower court that had sided wi'h Northwest, pushed by the federal Bonneville, Power Ad-ministratton, launched the massive construction program environmentailsts and had jeopardized to meet what was seen as an explosive grosth in the-v rtually every new reactor 'contem-demand for electricity. They issued bonds and ordered up ' plated in the nation, including the Long Island Lighting Co.'s Shoreham three riuclear power generators. In a few years,. they. ' plant. ordered up twernore plants, for a total of five. Then the troubles began. 'Each plant's construction Writing' for the majority. Justice ' costa, projected m the hundreds of millions, ballooned"- M Mhr u$ eld me ldt past 33 bilhon. Total WPPSs costs grew to a bogghng $24 of the Nuclear Regulatory Commission bilhon. And a funny thing happened to the electricity to issue ger,wa fMngs about the ltrnited dangers of nuclear waste demand the plants were supposed to satisfy: It tapered off. The Northwest, m fact, now has a power glut. rather than naving them become an So WPPSS adnunistrators canceled the last two of the environmettal issue at each licensing five planta-for which they'd sIready issued $2.25 bilBoa hearing for a reactor in bonds. 'nien they mothballed another plant under For years, the NRC has argued that construction. And, last week, halted work on another one. . there would be little or no environmen. Only one is still bems built. But the costa of borrowing tal damage stemming from the disposal money for the project--which has yet to produce one watt of suctur wasus because uchnology of power contmue at 815.6 milh,on a month. This week. would so'on become advanced enough short of cash, WPPSS failed to meet an interest payment. a oo g j, g, g,,,,, g,,,,,,, ld be buried safely in salt mines. Full default is likely. Perhaps bankruptcy. And almost rou,1%ough the lower court found these certainly a plea for the fods to bail out the utilities and bondholders underwriting the project. promises la doubt and that asignifkant environmentat riska* were involved ii.' That would be wrong. Unlike the Chrysler loans, a - WPPSS bailout offers no payback, (n. money or jobs. nuclear waste storage, O'Connor said
- Utility customers in the Northwest have had bargain NSC blanket findings were *within th*
energy for decades; rates absorbing the WPPSS losses } bounds of reasoned decision making." would still be lower than those in the Northeast. And l n' The court is aware of the problem of2 uclear waste disposni, but 'that is a bondholders knew the riska they were taking. Let them, not tazpeyers, foot the.maselve bill for saisjudgment. matter for Congress.and the agencies to wh&ch Congress has delegated au-l ' therity, she said. J l
= kJp t:
- r chief wants9E.,IE.
7 BP TJ'.1, L*;::!.'".1 l =MAY 27 1983 WPPSS to halt @ Taur another plant mustinn on the WPPSS projects' probably will come from the Wash.mgton Supre 4* Sy It0488t MOMilN$ reviewmg a suit filed more than a. Com.w dent year ego by-the Chemies! Bank of T 1(ALISPF,LL-BonneviDe Power r'. New York, seekmg to ensure pay. Admmistration chief Peter Johnsonwill recommend a construc ment to the bond holders. / Neither Johnson nor Halvorson en the Washmston Pubbe Power were avar!able after the meeung for I, Supply System's nuclear elant No. 3.' And Johr, son.?%IG7to a Kali. further comment. Both left the ses. sion to meet a fLght out of Kalispell spell audience se the Northwest Pub-Gerald Muel:er. one of two North. he Power Assoc:st:on meetngThurs. wonders if WPPSS No. 2 west Power P;annmg Council mem. bers from Montana, said John:on's day, said he will be comp'eted d'"" " d"' PP ***8 """ * *"'" + -* Schwinden on pnsmgMuller said WPPSS could save as. much as $300 mdhon a year on con. l WPPSS. Page 8. struction costs for plant No. 3 by But he project. 7 - Johnson said he in!! recommend mcSbaaing that added he would be ves%surpnsed if:WPPSS pla WPPSS N. o 3 be mothbaUed whene BPA board convenes Fnday, i E . completed. is mothballed. 'Mueller and seven other c p*unless there's a miracle between - Y h ~ sioners have just finished the North - 'now and tomorrow."He said the construction halt is west Regional Power Plan. He said* 4 'the only altemative ' acing BPA. that plan and its forecast of power' wrhich is trytag to negotiate a bad out l needs durmg the neat 20 years m-iof WPPSS and its previously aban.SS No. I clude an assumption that threeWPPSS plants will i ,doned plants 4 and 5. WPPhas smce been mothballed, too. lea l .'mg plants 2 and 3 with the those could affeet the plan's fore. casts. but not to a serious estent.Muetter said a nu No. 3 is 70 percent compete. No. 2 .tompletion. tis about 97 percent finished and I force reported to the commission
- c. ohnson termed its fate uncertam. Moments after Johnson i
that time constraints dictate reopen. ing a mothballed nuclear plant within. Ment. Carl Halvorson. chair. five years. Mueller said that while r d ,' man of the WPPSS esecutive boar,%sked the Kahspell audience. " the plants are closed. it costs severalhundred enybody here have a nuracle?Halvorson said he believes the rnamtam and preserve the completed portions of the project.On the problems facing BPA and * (Northwest is in a critical situabon be-seause of a possible defa I WPPSS. Mueller said "We're not in *I ', sad laterest totahng nearly $7 bdhoa control of what's going on.. events *j f' borrowed to finance the two termm. .are controlling us." . $alvorson said the finst deter._...-....... .. :,_.,, _ y 'p'sted plants. 4 and S. ~ <L L V Iy A ~.-.
PPSS to canvass world for Saisop piant money individual investors to attract gamble on another WPPSS bond n market." Board members agreed to issue. {3y JOHN GILLIE - search fu, unconventional money Mothballing the plants and re-sources at the urging of Tacoma suming construction in three Faced with the prospect today PPSS otFftTJ' Utilities Director Paul Nolan andformer Se years could cost WPPSS millions, of mothballing yet another nucle. according to Mazur. ar er tant g a worldwid, Bank President Mike Berry. Both The Bonneville Power Adminis-search for " unconventional fl. men are WPPSS executive board tration Wednesday strongly sug-gested the three-year delayBPA Deputy Ad anacing" to make the move unnec. -?
- ne full mar-Sver. 2 f earen val! !2'..e at 2.:t Ratcliffe expressed reservations essar;.
a month. Washington Public Pow. ket." sall krr/a. a copy of The about the practicality of searching CG is - Wall Street Journaf in his hand. for more money. er Suppiy System Treasurer Jun Perko told executive board rr.em. Berry said that companies like BPA. he said, has already er. Caterpiller and plored the market and found it bers meeting at the Sea-Tae Hil. Chrysler. Lockheed. which have had their was a dead end, he said. - ton yesterday. . In the nicantime. WPPSS Man. own troubles of late. have been Mason County Public Utility able to raise new funds. Dtstrict Commissioner Bob Olsen ' aging Director Don Mazur recom. mended begmmng a construction "I think its a gambimg society said he sympatht:ed with the idea slowdown on WPPSS s WN. P.3 we have here." he said. of saving some 2.300 construction Berry suggested that it might and wtute collar jobs at the Satsop plant at Satsoo. The board was xheduled to be corth paying 15 or 16 percent site, but such short. term " bridge" financmg could prove fatal to the interest, double current short-meet agam today to cons: der the slowdown proposa!. term tat free rates, to secure the projects. Mazur said he's not optirniatic needed money. The supply system, he said, has y abum se supply system finding He suggested that WPPSS ap-little idea how rnuch money it n:eney to continue the plant's con. proach other trokers to see if theywould need to carry the plant untt! he endorsed the are interested in selling more WPPSS' legal difficulties are re-i .4 struction, but bonds. WPPSS' present brokers. solved. If the courts rule that the g board's efforts nonetheless. Wall Street brokers have told he suggested, may be gunshy be-agreements on the terminated I I dc )cth the supply system and the cause of possible lawnnts agamst plants are invalid. or if tne cases 4 federal Bonnevtlle Power Admin. them by present bondholders. are still pending when any new { istration. which owns 70 percent Nolan urged the board not to short term financing must be re-I of the plant's projected output, halt the Satsop construction with-pald, he said, the supply system that sellits tuore bonds to raise out a thorough search for funds. also would be forced to terminate money would be irnpossible. "I thmk there's a pr:ce for ever-WNP 3. which ~is 74 percent com d The supply system faces several ything." he said, suggesting that a plete.
- najor lawsuits over the validityM lts agreements to pay bac'k _h24Lenough, in
.I.q# IISr"ter. ] rte. WPPSS ej '* it 2ondholders who lent '" W " m ew TM.ecces Iome 82.25 billion to build t %""d*** ~=*e af
- ate WNP _ Frent icit c:r.4r I at Hanford and WNP 5 at Sat P:-3 Pc:s res.
t Construction was terminated o. A3T.!A. T A3*.C3T04 op. hoes plants 18 months ago when1singconstructioncosts anddrop * '!E73-TRI3tJNS EVENIllG - 100,757 des power demand forecasts pre- -g;SUME-I. EDGER
- eated WPPSS from raising more 2 'l $N74 ooney to finish them.
Mazur said be recently spent wo days talking with New York rokers about obtaining enough Domey to keep construction gomg. t WNP 3 until those lawsulta are ettled. "They said they won't sell l 4 "i." he said. "They said there's : _t 7 J i -r-,. -r, '-=*r-%, '-"'*'Ng "Y"w,.ey..,
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- /
r RADLO ' 7E30 TS,#c. E.. 2C815 6fo-.:Cd3 g 4701 WILLARO AWNG CFEW CHASE VARhND h.;
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NUCLEAR RECULATORY COMMrgstas Fca s Ar.cN WETA Radio MNM All Things Considered NPR Network (. B CA E Mav 31, 1983 5:00 P.M. C: < Wasnington, D.C. W P La.ECT Nortnwest Nucle ar P rogr am SUSAN 5 TAM 3ERC: Today a
- ansortium of muni:taa' electric utilities in tne Pacific Nortnwest failed to make a,
interest payment on their bonos wortn 2 1/2 Dillion dollars. Technically, tne Washington Public Power Sucoly Svstem 13 in Oe'valt, but cae :P the biggest bar< rect: es in m.:::r. 17 :P nold -nile tne ocurts sort out wrc's resconsic;t for e oti.s. Joel Cumley, a reocriar uith t,e seattir 3:st-I n t e l '. i g e n c e r, says the trouble began a decade ago. JOEL CUMLEY: The utilit ies of the Northwest felt tnat and more and more electricity int we were going to be using more he years ahead. They embarked on a program to build five 9uclear plants, abusing all of its critics with the denunciation tnat they were enemies of growth, granola eaters, one thing and another. Gradually, the price of this nuclear program went up from four billion to 24 billion dollars, largely because of mismanagement. In the meantime, the customers rebelled against the resulting rate increases, creating less and less need for which had electricity. And finally, the Wall Street bond houses, enthusiastically embraced tax-free municipal offerings on Whoops, decided that they no longer had as much faith in the p rogram as they did before. The result has been that four out of the five nuclear Plants are now essentially shut down, two of them permanently terminated, two of them in mothballs. STAMBERC: Any lessons in all of this as to,how good for electrical demand, and also how good predictions have been e NEN vCW e 'C$ ANGD,[3 e OHCAGO e Og*0 Cit o 4.Q cares D7NC4, Otg3 CF.C33 6 WASMNG'CN C C c.s :r ne< v ee ~rs-: a, e.~ om: wm ne es e, soo< % '<ca s m -m s.ws., va. mo we, v,
- n.~ o..eroc.ce:
N~ _ y N L
i ... ~ 15! +. 2 'the private sector is in making such projections? CUMLEY: All predictions were ctsastrously a r r. And if there's any lesson in tnis, I suppose it's tnat you can be. con; and you e3n go on to higher things.- Becausa the person who was our federal Bonneville Power Aoministrator out here in the mid-1970s and credicted the shortages and pushed for the constructton of these nuclear plants is now tne U.S. Secretary of Energy. 03n Hocel. STAMBERC: There's a great worry that if they cerault, you' re p redict ing it or maybe if this goes on as interminably as will, there would be a very detrimental impact on tne bond market. Are people feeling tnat'that's true? CUMLEY: The people that have invested in W5000s bonds have seen tne value fall out of them in the trading market the last couple of weeks. We have a fracturec situation, wit 9 83 utilities that own share of these two dry holes refusing to out up the mo9ey to pay for them, and a great court b a't t l e, 50.etimes resembling and A::b o t t and Cost'ello comedy, raging all cver tne region in the :ourts over snether the utilittes will oe forced to pay. Even if they are forced legally to pay, the customers car .sim:ly use 1933 electricity,.a n : the utiltites n?n't 9 a '. e - " i: money t0 p ay of# the3e de:ts. STA*'3ERC: In tne meanttme, %ere's a l s :: cites ';r a feceral caticut. Does anyone believe that that ts Itkely' CUMLEY: I don't think, the people crying for a federal bailout know how deep the well is. I think there's very little chance of tnis haopening. I would not want to expect s a m e : 3 3,. back in your neck of the woods paying between seven and ten cents per kilowatt-hour for electricity, I don't think such a person would be willing to ball out customers out here paying between two and four cents per kilowatt-hour for electricity. STAMBERC: Yeah. Your rates are m'uch lower, aren't they, out there? CUMLEY: They are much lower. We have a legacy of cheap, low-cost federal dams on the Columbia River. I suppose, as a fellow taxpayer, I should thank you for helping put up tne money to pay for them. But we've squandered that legacy now snc we are into this nuclear debacle. STAMBERC: But where will it all end? That's the t question. CUMLEY: I think it'll end with the biggest municipal bond default in American' history, four shutdown nuclear plants, ~. N. g,
Y s p 3 e i ni on. of-tnem being completed, Northwest rate-payers facing ~ normouslE increased bills, being unable to afford tne price tag, and everybody, from'tne electrical ef '*2'er h* 2 to th' UU"d- "f holde r - in.rlorida, taking an ence,cus bi d t f I 4 as _7
~ 3,,, o : qg;ois.Lc. 's c 4701 W1LLMO A'4NUS. CRW CHASE. MA."hteD 20815 65c-CtB g: ,e 4 4 NUCLEAR RECULATORY C0ti!1155[0N FCa 5 A CN d3LA-TV mCGa'A Cood Horning America ABC Netacek k mv .v a s i i n g t o n, D.C. cA E June 2, 1983 7:00 e,.M. SL;&.EC' Default in Nuclear Plant Cor.struction \\ XATHLEEN SULLIVAN: .0fficials at Washignton siste's biggest utiitty are trying to determine if tne ::noanf .5 in multibillion-dollar loan for nuclear Oca?: :lant default on a construction. ine utility failed to meet a 5 H m.' tan :": treat sayment inis seek. Snella Xast tells us had the utility's cro 'e's ca;1. l SHEILA KAST: In tne mid-1970s, tne.isso:n;;;' P u o '. t : l Poder Supoly 5ystem, nicknamed. Whoops, $$t out tJ 7ee a ? 3-jected demand for electricity by building five nuclear po-er clants. To finance them, ' Whoops issued tax free 0 9ds. !9 fa:t. it issued more such bonds than anyone else, 33 cill;on.ortn. Some of them even were backed by a federal agency.
- o man.
investors, they looked as solid as the concrete and steel going into the power plants. But in 1983 the demand for electricity has not increased as forecast, while the cost of building the nuclear plants has skyrocketed. As a result, four of the five p l a n '. s were moth-
- balled, Whoops seems to be living up to its nickname.
MAN: Because this"is the largest issue of mu n !:10 al bonds, people may be hesitant to invest further in munict:als due to the widesoread publicity a default of this nature 4:cid ental 1. KAST: So the specter of default is having s eteole cities, and utilities, which also
- states, effect among other bonds to build highways and bridges, power depend on tax-exempt plants and housing projects.
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- pnamed rseervacans" about ce J.
-sU'!{AT-1,107,07T L 'e ~ ~ ~ kTati'or'a!r.cws appears on. ,. 5jf-:?:! Paris 6-9..,,, ;. -- .... n 'q L operedan of ee power plant and pesi tienedceecmpetsecyof theopera*.=s.The Gove gacians by engineers that *.be cleanup atthe p-= 2a safaly asitshz d. erwnmtesf on te scafytr.g :nanap. .be me":t cm hg *.:3 !!3 m**'*=tI':l*. d u whether the "-<f at-a pad Unit I may be a*? > rescarted. De reacter was s!:=r daw: 2 .f [far refuan g atthe ti=e cf the *.3"I ac: 2- %. dent at Un:t 2. vt2ca was .,r ccm-:-en =e.a-see: = .o* sedtaanot epe-stee s:=ce. .s ,. ' [.,re3J.J.. . w.gettce,.J,. t n ne. s nse was m sve.e.3e.:eee, front Ed.t C:.:s.- H Pese Page res: 12. W. ! 07 T;'.%, !!.T. N V' TIE 3 m 4 m3 vo:= o - cu,So EU'!D AT -1,133,07T .a h esrUtities'in A-EantBid.j 4hr wl x t'Es3*Ciba'S'b'<v'WW' ~ ' M * ~ 'O* W' tceedthe supply s'ystacs's ef.' c r..:s 2 t'. i M A **.
- aama**ving come out oftthe meeti gs ferts.to End. =cacy to key u::it 3.
ny, ques going. **They havw not Movws us ushave no l , '.@'88"*"'*.nnueseves naas-m ;,,, g wtate me. supply syrtant Monday. to" fadcVoget,
- SEATTI.E. June T--Mhnagers of '
the plant PaciSc. Power and thatthey%'Weet mew W'o
- :br Wed thesnarlargestpetvateeniffffes hsthe *T.
Campmay, saldrindes **I.das't ;. e arv really upse .PostAc Natthwest arm seeklag a>1ro7 (8,.11ps:'enhoopconsersacdom amovtng tas a no knaur'etssearitwalbe a rear Saa.nc., he4.act11kade stomiew Omer uttities involved um plant orwtat.*.J. e,rbened tse port'!a'ad.Oref areWashington Water Pewsr of S that the Washington Ph,- ~ Systearhas saidit/ 5eeked 10 perceneof theUnit 3 band. p Wash., and Pon!and Gece dear ....as s..v.,N. /.'2 .Be 2 i h. -and has tuvosted stil en131on ist the-i "C' inusidmashhat . The esecutives are meeting w t lawyers over the wenkand and will. plant -, I..-, v a - i ~ exec r Aczzard!ng to Gary 1. &a en tothe supply utilities have eked 10 ' utive vice presidact of a of tbs St.E hillier is banda,; Meyselac., a Seattle brokerego est I y. em's bonds,ce ' 8' dealsinthe power "os might take j to construct 2e system's Unit. at power de-. 'Invester.awestover Unit 3. **Ihar are equipped to 3,tmerMpercuet d stices/' teens andinabtIftytoprocurefinase "'Bandte constructan an operare a "a by bust. , ~3eemuse of a lag.,the syntain has already tard... he said.:,matedthreeomernuclearplantaLdas "* a record.and credit. 3 '.? Tgte . ep*==ns= for the6 ortglas! C. ; -ta'* program. -
- "'Oer kn=edan is that the owners *.'.'C2ns
% that. yScumutPower andt.!gisConspaw-j - -wm.== e- - w ;;;,,T;,,, %
- asumatttee wur rm_
,,,g,g,y ;qq r h -- - .m.. n.
.. w \\ NPPSSIsSeekingPridieLoans52toid =,tm.?#4?&.fMid1 i. J.a**,f"Lw'*1LeWhc%et, c c .m. 5fbthbal.lin.gx. o,3 &. s.gr P.o.:icer P>roject ~ the vote makin; a:crovsl '.miikely. nar .N clea com m e. u.e m. es m m .g. .y ..e. - . M.i rJf 'what the proposal ! night et: ail or how mach tH be sot.gic B::t he said it would coukt fbice t!!c de scir tr.:a a: sit 2 37 3,,,, 73g,,,, ' 3M,. -, larse horrowmg from a:eraler or !anders 'said a WFPSS !aner.12 244!:ci, scr e $5 ' mener w w aa.svamme magass rmer./.Tas PORTIAND. Ore. Wasittngton Pabile and wouldn t regare any leststante act:ca. ' the att!!' fear have mrette et 'e;.! ac ca a ! ptwer aspply System dec4 dst to lcok be-. mapuung poenhie landers w1LL ba pcma..biodr the metabak t-If W 3 parucpear 1r Pndays c!amed<cor mee unrtnrlaslase. ,yend the bass marketJoe as attDatannat landerr would teeth deal with tasse proble-a.WFPS No.3 eck apart.ta asoed moeballing Lla M Wand tnanunce ="=* but M amelser pseer project.. -. e.3 citDed 15 disc 2ss othef'patrHM sources of, Qareetty, projectNs. Ps aesmustsame - f 1221 se can agm *4 a pfcposa!.*. Mr. lprojec:s in January tain anly about go numan of the.esumated 08d8-forecasts for ecergy ter a:412 3e.eg c:t. 31 bilDas required to complete the 74& built Met e.cstn.cc.m a .Perta said."But pcing me Sna:cinC.s go-In Aar:1 UE* It eata 44 tmlt piaer.%o. t.tt ts plant. Coastmcuan.as the plant requaes h M Wa worm.haid about EB m1111ce s month fer $1tt pmduc-,kgRha m gl@.at sa esort as and commtonal funds mi ayear: hr ca.sazte reaa:a. tier..Jemma D..Perho. WPPSE cient Sasa-da! of!!cer aed.*:taanrec.takt. T3e giantia FMynterminufweopuldaT3nd 2ry?"X g y; gen,3, ete and is schetM 're ' a.w. A. a~ '~ protectet ter ccac1 total'or Su. bel 3ow ; AaWestba.he said.Is **caawewna 2p pg. 33 3,;;,=3,. t1 IJalensWPPSS cza tsise the hunts, it ex. Wtr progrsa. s,that sat!sf'er potecta 3- ' - r/ - 88 , '48tD'f' ' 'WPP s har be.s' ucatft' 2r tssue-24S / rcfJ..i./ndp "ig pec:1*a n. spend 1rcet.ca the plant for cres. ' " > ^ ' *-.- r -n - years, beg:nnt:g late this month, nat.wou t w swre m oe. m es Iname plant 3a.1the 'ourtw wPP55 are "tioed cons:rocten bends fer ce pre; e: be. Frer. ter cin.c eense'ef':rvester fears 2at WPDS3 rctgbt'I Pete
- ar:s :s te':ance!ed ce suspe:ded. :I runds Pete P oe,.
can be. : bussed, they wouldn't c:ly Mcw default ce prweef Nos. f sed kIast nes-day. WFPS1 m:.ued a 1:1.4 :.C cs :ccc;ytaterest pay -et to tr.ste-W.i'.*. ". '.. -* cetstr seten to cen:::ue: g*.t:ng t! e.~t seu!d C.* :.; also 'ic2d on a ta;or ::ast ed pet :::a!'e-be ari l _ -.. - - - -. -.. ~ r21 ba:::e berve-a WPP!,5 sM four la, case prey _r.
- ~*
" ' k,*33 O Ca May % WPPST meca {UN voet to beg'.n _a three year suspens;cs 2t;constructc - $ M, C $ ; ves::r<:ned r.;:es. WPPSS otoczais and represectauves f Ce 'our invest:r e ced utitces wt3 shares g, 13 2e ptmaet agre"f here Fr'. day to try to diccnal financat wiss't 'ound. It crder=d j . de'telap a financing plan by aest nursday. an 1treediate-cens:r cteu slowdews bt:1, i Mr. Perm saad. De g:oup tames :n propose said woes shoidd be kept tr a tevel eat, (t a plan m enennurraesidWPPSRezecaire *wald,at:our$11resurcptica mutatce 30 ; board nursday, and to seer approv:12 the day ne scucn had be tr r=ce, Ftt ' by the Beacer.!!e Power Admirra- ' plan at an, execunte board meett::t ' iirates..the federal esecutcry marseung u-day. Mr: P.erso dec.aned ta Mw tm riib's d. agency. wttich is to matter.much of me ' power Dom the project and to repay part of m tarcosts ! mar tas power sales revecue. l-Dutt the decision brouttt WPPSS and ?Beners!eInts & directcjash with the tur resvesserswostultittles that togeber,own a M state ts-the stast. Pacfle Power & %IslasseePeresmooneralsteelectr - L ot!r,9ftJtE*.and.,eertr hnki 1.10. imerest at B
- the p%Paget Sound P9wer er Ilgtet Os.
anuevue. Wash., sat waaktneton water. Power Co., Spckase. Wash., bald 5. each.. Ther ut11mes oppine motabaillag because t 'wt!Iboost project costs. In additica. soca. itfear'!!st !f L-15al com:tet-131 optrat:3 "E g plaaf.1s.delalpl three years frors the l \\ l - ~ ~ ~ ~ ~ '"---e,-
e f Y4 0 y WaswNS ON. O C. 20CCS .4
- Front, E$t Other
,; g .res.. rose ; rose .t,.._, nzn:- a::, p.c, PO::':' g 2 [ggj 1:0?.1213 - 534,500 ST 0A't - S':0,452 WPPSS FurNughs 2,250; Misses Nar Interest Payment ./ . r.,m v.-., .~., -iound ;t impor: ant that arpr n.cu W SEATILE. June 1-The grcaing nnancial million a:readv has been dep.5;:ed by 2::1-woes of the Wa hington Pubiic Power supply itie. mto escriw accoun:a. subject :o de ecn. System, teetedng on the edge of mult.bd:icn-trolof the court. dollar default, have reached into more pcck- -The court also found there ~s no imme-ets with the laycifs of 1.250 nuclear power dia:e ham to boi.dhdje s as a re*u.t ct t.e plant construction workers. injunction, statin.; that July interest pay-WPP55' executive board decided Friday :o men:s can be made from funds current!y halt construction on nuclear plant No. 3 for available,' Chemical said. three to five years because it could nct ra:se If default is declared. Chemical Ba-k more money to ecmplete it. Pink slips went could demand payment from WPPSS cn :he out Tuesday, when the supply system ma5cd bond debt-*hich could total incre dan 57 a $15.6 mdlion mcnthly interent payment due billion over the next 35 yeare. to Chemical Bank. trustee for 32.25 billion m WPP55 construction bonds. In New York. Moody's Insestors Ser ice Although Chemical had said it would for-Inc. suspended its rating on bonds issued to mally declare WPP55 in default if the pay-fmance three of the five nuclear projec:a orig. nally planned by WPP55. ment was missed. Superior Court Judge Jo', Moody's said yesterday it had unde.- aken seph Coleman m King County, Washington a new review of the bonds' creditwerthiness., , signed an order Friday prohibiting the bank and bondholders from declaring the system in default until a trial on the matter is held. Chemical said it is considering an appeal. Among factors being weighed by Chemical, a bank spokesman said, :s that the court
4 fo*C3J., r.!.*Nigence, bnc. vamme eee. s e. exe-hont Edif Ct.:or I P:ss Pogo P:;2
- n
=, ::.r. e M JUN tM l -. _...... _..__, y;;;qfj, f p @ q- . COMPANY NEWS . tj e.; ,..~.8 I Washih^ :6.E.Pii.W.aeF = l Misses aPapQ.inent D.'. l s_ p.... actant wm, an ar.cr: )r
- d = m
- w = - ;...
,;. r"Mmeal, said the bank ws a,. ST.ATTLE May 21 6 ede by the weeked whecer to as the Was!Wigten Public Powe7-5upply but sn ad&ccalsultm obm me c / System edged closer to default today funds due today, Reuters epersed.] on 3L:5 bilhon in beds f.'oated to can. But in Washing'an today, de*adt h* stract two 'suclear rencors, when it took a badt seat to cdocers over :ay. snued a councly payment. The plants wers abandoned because ce ogs of 1.300 pecple at t.be power sp. need for power had been overtsti-tem's nuc! ear plant No. 3. The celity's mated and the plants were too expen. exec =trve board voted Friday to sat down the reseter fer tres year-be. stveto buHd. But 12e Che=tcal Bank, trastee for cause de boarti cou!d cet and r-I3 the bondhciders, has been blocked ttdlion in finanetsg in the face cf 2e from declaring the unlity ot5cally in pensible default. def ault. Last wee!t. the bank was in. P! ant No.3,11ke No.1, rb.tch was defiz:itely res* rained by the iCag mWHed a year ago because cf a County Super.cr Court from maa.ng lack oWsW and sh-inkage in.ne sucha declaraticc. is backed by 11the court had not actad.Chemie=1 - 5Inarket for elec::icty,hetraten. the Beneville Power A would have-Issued a **M nodce a-Federal agency that markets ha:f W the uduty 90 days to make th de pown casumedin h twpen. H5.8 million monthly instaHment that Peter Johnsca, Bonnevine's admin. was due today but not paid. If the in. 1stratw W maeymrepay bonds an stallment was still not paid by Aug. 30 en h.L and 3 plants, as well as an the bank could ask for repayment of N2. which is expec'.ed m proc +uce perhaps the entire 31.25 billion. ac. powerin February, would be paid by cording *.o wintam Berts, vice prest. wM:h wiH tocrease rates dent for trust and invest: pent at. df lt me sw=cep l'..=. h specte. w m.t ar a e au. system is, ,er., Cart ph Coleman of taa S,o ' Judge H. Jose e,, w. . fordag. utilities, municipalides, caus.. asa be harmed by the missed payme:-ttodaywr=n=.C5 micalhadareserve '. ties amipart dist acteunt of 183,8 milHon from wtdch it minpre sen beds. could pay the bondbolders. Sonne "U . The latest victim was the Port of 4J p,,. cent of the 88 udHdee '. hat p Taconna, which 'as no caneeden sored the now.abandcned plarts have wi h Tema C1g Light, a utility that also paid $30 cmulan into an escrew isparticpantin apowersystem. f
- account.
I h porton Fnday acapted a ne-sociated 12. year bid 'on E;s mdhoo in LawsuttataS States bonds to finance a container ship ter. Chemicalis being restrained pend. minalinstead of the 32. year term that Ing the outcome of lawsuits Sled by commisstocers wanted. Instead of the bank and others in Oregon, Wash. psytnginterest of 8.5 percent,the pcrt ington and Idaho to detertmne who is.willbaveto pay 8.39 percent. responsible for repayment of the debt. ..;. 4. ) I
1 ~ aw 4 l: or'awesifi:y<Ha' ts s o,. ; u. _,. s. y d g WAs hot N g . Anot'aer.X, up. ear Projec': m m.?cM,3c,gaOCs e E.7 N.7 I;"*;. ::.T. ,,,,,,,,,,4 Immediate!y after the announce-s ; ,EMay2y-De %shing dmochelled for three years, traders g 28 % s ment that the No.3 piant would be * " -
- i-sEATTL
.?/ mm Petuc Power Sepply System will.-dtcyped the price they were wiuing to i a - -- - _ '"'I'ma3 a.
- Ig as amarty 1,400 craftsti en and **.psy for.the power system's bonds by
~# tugs g, a es-enh and priserve" gone to two points. Light trading oc. U W Y -1e"03e07I i ) 7 n N amether of its tmclear prokets ou, leurred at the lower level and then Many analysts, however, also pes- ~{ because of a !ack of Snanc. *
- The action leaves only one6cf five *-a,gadir.g quickly came to a standstill.
tion the need for Umt 3. The North. 'The street did not panic because west is in the throes of an electricty seclearplants intt:134 bu. 5 'they w airsedy awars of the prob-surplus that is expected to conti:ce ? Busprogram.._ .~ . e tems," one ! mod trader said. lato the mid.1980's. It is unlikely the the pswer system's em!astive - teerd esak the action today so the 74 J* Iowever, the action was greeted by region wfIl need power *. rom Umt 3 in i-whoops and cheers by rata 9 eyer ac. 1ses if the resemr w=re completed an cumpleted project,'snown as Ostvists who No. 3, after its invest:noe advis. - champag:e corics schedule, Mr. Johnsen said. The ocly es said they ciaald not Dont 363 mil.,,. and the phasing down of powe-buyers in view are Souewest en project. Board tnembers said the *..Umt 3. Utilines but they are =ot wining to pay Bela bonds a===acy to complete.. Bonds an Uczt No.3 are 0 pe cent only 30 mins per iclowart.bour. Yet -MM by de Bonnevule Power Ad-Unit 3's fully allocated c:sts ars 90 to system's!commadefaptTues "imnistracen, a Federal agency that 70 mins. Mr. Jrenarn ques a.s en SL3 bu11cn a bonds sold to.azrartets 50 percent of de electricity whether rt "is prndect" to rim a pla:t ausstructtwo sum 4eramated Luc!est ;. consumed in the Northwest. Four of in wttica "we would not be recove:.:g suite had made it impuestble casecure 'ahRtional M a
- Se region's larpst invester.owced our costs."
- utt2.ies own 30 per ect of 2e project. The Soccevine se*- 4cator sa!d j k Oves" the asut<30 daysi th'a' power " the. bonds on mothballed Unit I andl that if his agency 96 M la5eoght N.*.. ~Bonneet3e is backirs 100 percact of cance ccustruccon cf Umt 3, Scnne-ttis oot iv.c-- -..% it wgl take 31so of the 38 percent cercpleted Umt 2 y e wul caridnue to seeir hne-ville would need to raise rates regior,- . lor which fuel will be deltvered cett wide by 20 percent. dis would also M,h ". lr to anal step to c@ent for Cweek. By companson, 88 Northwest I have an impact on Seccevtt:e's ".can-S off another 540. utilites have backed bcnds on the cial stability. Bocrev.'!!e is highli I. Gree yearswerkers. A yest ago, the power sys tahaMemed units. - - - -. -lesesaged, wth U pe tent of its r-vs. - ~ y gem also mor**=t'ari fer anancial ea.. Peter Jrenwm Bcamevtile =N-A num cu rently going to pay fini i sua a 50 pertect completed umt, costs,incit:d;.eg at*r-st nsanc::& rc ,. known as Umt No.1. ',.
- Cantinued as Page 44 the 36.2 bt!!;en un be=d.s sctd to far on s Ucits ;,2 and3.
B Continued From P.rst Basismas Page Ajthough de power syste=1 of". tramr, predicts that the four private li cially will be in default en the bcnd 4 unlices will' sue to prevent Umt 3( debt for Uruts 4 and 5 cc Tuesday, ~- s,runervation. G. Eldon Drunnan, the! Judge H. Joseph Coleman cf IC:g chairtcanof PactSc Power and Light t County Superior Court issued a w: t Company of Portland. Ort., for exam-! ten orfer today rartraimsg becdhcid. pie, said t!ns week in a letter to thel ers and Chemical Back, bondholder power rystem that it considers its fai!-! tnastee, fron2 declart:g ce pcwer sys-are to obtain financtng a brusch clits tem in default pending de settle =ect ownership agreetocot. of somelegal ons. This preve=ts Analysts view the primervation with bandholders demandi g that caurseni. "But constructson on Unit 3 that power system pay overdue debt , has a better chance of restarting than witlus 60 days and tram accelerating onUnit1hnamof Unit 3's 30 pertant the total 32 25 bullon debt and matr,e a , band by terrestor. owned utill* itdue and payable Aug.30. tsas said Ansten.vice presi-ne seanrse C y=4 Unit 3 dont of musicipal reesarts for Dresal bond trustee, said it was.nappropri-Burnham Lambert, a-brukarage are for them to courment on the Unit boose. 3's preservation at t!ns t2:e. But Mr. Johnson will not discuss whether Umt 3 at some point will be terminated. "That subject :s not even just15able for thought, let alone for cpswideradon," he said in an inter-stew. H* 4 + - m y
o2 WPPSS Heads Into Battle With 4 Utilities r,:a.a,.,,,,,.y,,,, 'VASk W Cat. 3 c.geocar OverPlantoSuspend WorkonPlantN,o.3 zu g gr U * ** E 'A ** T.'I H. Jose;n Coleman. Was:=g On State k;e-By Noam THe8*4 flor Court judge for ICng County. !ast wetA --El.Z E"'I' *7 ' * * " . ~
- ~~~W swraenne el eus ww. staure swam.
enjomed the bank from dou:g so. ,E.[)$,,.31 Je83 i SEATTLE - WasNagion Public Power On Fnday, Judge Coleman er;cded m d3, M i Supply System is heading toward a major tis Tuesday ruikg. prohibitng de back or "-*a dash with four big utilites that oppose its bondholders from dec!anng WPPSS in de Sc2als sad gat No. 3 !s abou F. zm-l plans to mothba!! 1:s No. 3 nuclear power fault for m.ssed payme:ts as long as a tnal Plant. . tavolv*ng units 4 and 5 continues or un!ess, pled but.at cey han My about m la addha. ESS rnay face anode the injuncton is lifted. If upheld. the order mimon of about $1 btllion requ: red *o ccm-tound of litigation to keep from being de-would avert the Ilkeibood of WPPSS falling 'piete it-cisted la default on 3225 bahn of beds N into defacit before the end of the :rtal. The execudre bosrd voted 'o slow cen- ' sued for its Nos. 4 and 5 nuc! ear genera:Ing But m"inal Mines, a lawyer represent.struccon for 30 dan and to ma2ntam :t at a level that would allow constnenen :o re-units that were canceled last year. lag Qemical Bank. said 2e bank is likely to Dure g cat period it wt3 continue to At a special meenng here Friday, WPPSS's execuuve board voted to halt con. appeal the order, but it wen t decide en! search Mr Snanct::g and vt3 seek approval l 'struction of the NL 3 plant for cree years earfy ths weet from uclines and the ow e-s cocnut:ee to a The reccmmrndaton.o suspend c:n because it can't ra:se Nads Mr more bui:d. The tnal before Judge Coleman concens 4 mothbt! ce pre;ec s. the respecsibility for repayt:g de C."3 tt-gg, lion of bonds issued 'or um:s 4 and 5. Be scause ce ;!a:ts wee a:ce!ed, It would be the fourth of WPPSS's Sve partaD% built plants to t* caxeled or sus, pended, if the decision is approved by an 98 unlites 2at par ct;a:ed are centest g-met ag*'my. Smee m 2 90r vote of the plant's ow:ers comminee. I betr Habi!!ry to n;ay ce bonds. Unt! *.he cent act to use e!ec nc:y from te No. 3 Isste 's resolved. mcst also have rehsed :o 3j g 3 g,,, 3 g Four inves:cr ow :ed mes, which to. geder hold a 00". tnterest in the plant. op. make tr:cnthly 2ter st page::s :o WFPbS., M M 3 cme m. eve'n 3*;-
- cse the constructos halt, and some have pan g ins ead =m esc cw.
lthe federal tg*ncy said it cou!dn't ; rov.de As a result funds in project accou:ts threatened legal action to block it. have txtd:ed. %7PSS has sa:d cat un'ess 'unds to concate cons:ructoc 'We may never get approva!." said Carl it receiv*.s an inhs::n of cash. it w:!! set ng another bcnd issue. But four mven:r owned utmees, w"Jc: Ha;vorson, executte board president. "But we're getcg to go throug3 the process thars aside today most of the rema= der for :e;al gg ' npr*setH on WPPSS's m;tve requ: red." He added that WPPSS nasn't any and admisstranve ex;e.ses. That wcn t' boat!. ar* ex;ected to oppose de moecall-t after auve but to mobbaII the p: ants be-leave enough for the interest payment. but ' he m ' unee Mm 1 cause "we're not in a postnen to sell because the escrow feds would cover ce Pacte P;wer & LigSt Co. and Per :a-d interest Judge Coleman ru'ed WPPSS :an t. Ge:eral E:ec nc Co.. beth cf Por lard. Ore.. ' bonds." If the owne's commit *ee can't agree, ce be dec!ared in default. ea:h hold a 10". :sterest 1:: ce ;!a-t. ? ge: es;ute wou!d probably be submitted *o arbt-But bef w his ruling. Wan Street was gou.d ? wer & Rget Co., Sei:e. :e. Wasa.. v:cs, a WPPSS lawyer said. "It could be concer:ed dat WPPSS might be forced :o ed was 2:ren Wa:et P>er Co Spenne. cr e-consuming; it's a c.mp!!cated pro-Ele under Chapter 3 cf the federal Bank Wasa %1d 5r. each. %7oSS hoids ce r*- ' ceas." he said. ruptcy Code, which deals with mumc;al main 2g 0".. but it splits i:s vcte v.0 Soc-Separately, on Fnday, a judge here pro-banknptcies. Standani & Poor's Corp. felt nev:re on the evners cer.rmnee. i hibited trustees and holden of bonds for de possibility was great enough that on' At te executve bcard meetrg. %7PSS ' WPPSS Nos. 4 and 5 projec s from declarmg May 13 tt suspended its ratng on 56 St!1 ton' offica:s sa2d %7PSS No. 2 ;rc;ec: is M.3",
- !he power supp!y system in default for of bcods ;ssued for WPPSS projects 1. 2 andi complete and is scheda
- ed !ce Nel ;oad=g "1 '
I nussing interest payments on those bocds. 3. Septemter. W7PSS stII needs abcut 1150 iBut a lawyer for Chermcal Bank, the bond The uncertainty surrounding projects 4 million to compiete ce plast, but on Fr: day trustee, said the bank is likely :o appeal the and 5 has made it impossible for WPPSS to Bonneville repeated an early prcr:use tn pro-raise additonal fcds 2 enunte emstme-vide the funds. ru!!ng. A WPPSS spokesman said 2ere also are con of project No. 3. On Friday.WPPSS of However. Bouevtre's adr 'jnistrator. Pe-wornes that bond bolders might seek a de-ter T. Johnson acknowledgad cat he ex-fault declaration in some other court. pects Congress to exar:une the decsien. He prompung more !!cration. .said thr.t Bonnevt!!e hasn't yet found a arm In another action Friday. WPPSS's exec-market for pcwer *mm the plant but that ;t ,utive board declared its intent to start sell-is negonatng with several potendal users in
- tag off some assets from the canceled Nos. 4 the Southwest.
WPPSS canceled its projects 4 and 5 'and 5 plants about June 30, to br rg in much-needed cash. But WPPSS officials said tn January 1982 because of reduced fore-they expect to take in only a fraction of the casts of power demand 3: the retten, and in 'about 3200 mdllon invested in the power-April 1982 it suspended its project No.1 !cr l ! station equipment because the market is as long as Cve years for the same reascn. t -(
- g!utted. Sale of the equt;' ment wou!d make it
.unlikely that WPPSS ccMd revive the pro)- ) ects. Today. WPPSS is npected to missr a; $154 million mon:hly interest payment to Chemical Bank for bonds on its Nos. 4 and 5 plants. The bank had sa2d it would declare the payment in default if that happened, but
I
- 3...OT:3W6S1:
Utilifies in
- NJd'O'"'* Ja'-
6 WAEMINCTCN. D.C. cecc5 Front Ecit Other W e Pege Pese Pass 9 na n =, n.v. W3 JIJN 3 M3 Threaten Suit' uce =0 - c u.c90 SUMDAY -1,403.077 To Save Plant .n.eudmieshave,ormedasui,com. mittee, led by Puget Power, to find money if the supply system cannot. """T'"""'"*""" "We hope we can finance construccon SEATTLE, June 7 - Private utili through loans from banks worldwide, ties that have inveswd 200 million in in urance companies, oil money, any. abandoned or mothballed nuclear thing we feel comfortable with." said plants told the Washington Puhne JackVogel.sposesmanforthePacific. Power Supply System Monday that Light and Power Company of Port. they would take drastic steps - in. land. Ore. cluding legal action - to protect an. The four utilities have already put other 3"00 million they have poured 3600 mi!!icn into nuclest projects that into a plant that they fear nusht also were halted in the planmns stages bei. be terminated bythe supplysystem. causeof antinuclearsenument. Craftsmen were laid off at the Termmation of Umt 3 would strain planned plant, designated as Unit 3, the financial health of the utilities. last week and the utthties' executives Curr=ntly they are mising money to saythatif new financmg cannot be so. ~ finance their 30 percent ownershfp cured to resume constniction, they share. "We issue first-mortgage will sue the supply system for violat. bonds and sell stock backed by Puget Power assets and potential ave. inganownershap agreement. "We will instigate some type of nues."Mr.Myerssaid. legal action, although we are not sur, But terminated plants rain no reve-what form it will take " said Robert nues, and Oregon has refused to allow t-?.ger n s;ckesmanferWashington Mc2fic !.ight ind Hi.!snd Ge..eral Waterpower,a spokane utility. Electric to p.as on current construe. The four invwtor. owned utilities tion cuzets to ratepayers. The costs an 30 percent of Unit 3. The Bonne, must come out of debt and equity in-ville Power Administration, a Federal stead. The State of Washington allows agency that owns the other 70 percent, ratepayers to, shoulder cray a small wanted work slowed because it could portion of interest debt. not principal. not* borrow on the bond market the. Bonneville's miminierrator, Peter .Snel SE3 mildan aseded to complete T.Jahnenn has ty* octed the em' supply system already has par. ' pleas to enmpi . nit 3. saytag thatifthe agency paid the r===*ning ses3' byhw1ges. the sma$ently abastaned two other au.millionitwouldneedtoraiseitsrates clearplants-Units 4 and5-andIts 20 percent. Bren=ville has raised $hihlfe last week te mest a payment rates tenfold in four years, while 2 en 82.25billlctiin supply bonds power demand has dropped, he said. that had been floated to those plants had turned bond investors away freut the sumaining Westengton Public Powerprojects,theysaid. 'WeNeed she0utput' "It is a real tragedy to have a con. streetion delay or to potentially can. . cal 'the pro}ect," said Robert V. Nyws, vice president of the Puget Sound Power and Light Company of Bellevue, Wash. "We are convinced j weneed theoutputof thisplant.",* l
t The WIwops Disaster i Congress is still wrestling with the cost overruns and because the anticipated fraJJOnlaklg...ence One.' question of whether the federal government demand for power has failed to materialize, r wAsmuorr*. o c. sooos - should make a major commitment to all of the units have been canceled or put on Front Edit j Other. financing the clean-up of the crippled hold; only one facility is near completion, "J" '#*** i I'9*' riuclear power plant at Three Mlle Island. and the consortium is on the verge of ST. LOUIS, llIr:0Uitt Ilut that $1 billion-plus problera could begin defaulting on its bonds. to I ok cheap compared with the financial Rep. George V. Hansen. Idaho POST-DISPATct[g gg niess nucleal
- WashinglDu.pttwgr has created for the Republican, wants the nation's taxpayers to g
blic Power Supply System. join with the BPA, Whoops and their EVENING - Er2,190 * *. The system, otherwise known as Whoops, customers in fashioning a ball-out, lest, CIINDAY - 433,317 is a consortium ot reblic and private utilities default give a had name to utilities in ' ~ organized la conjunction with the Bonneville general arkl nuclear power in particular. We Public Power Authority. In the early 1970s, doubt that Congress will want to nnh to the i, Whoops launched a nuclear building boom rescue. Nor should it. 'the interesting that has gone completely bust. It began work question now is what posi:lon the Reagan on five nuclear power plants, which together administration will take, given that Donald - Daily Newa were to cost something over $6 billion. Ilodel, the Secretary of Energy, was a ma}or Aoday, over $6 billion in delt later, it is force in pushing Whoops into its nuclear N ow York, N. Y. expected to cost $i7 biiiion more to complete program when he was sonneviile Power's
- the building program. Because of the huge administrator.
HAY 24190 As Shoreha~m future flickers, Lilco rating dims \\' interested in bodies and souls-then dollars and The ratine on the issue was lower'd to a double B. e By MICifAEI,IIANRAllAN eents. I;ilco la in the business of making money. rating. When Lilco's rating was dropped in March, Standard and I-oor's yesterday lowered the credit They're not. In fhe business of saving lives." the utility had entered the market to sell $75 million rating of the Long Island, Lighting Co., for the A Lilco spi.kesman said yesterday that the last rough o schedule
- said Li second time in two months, ating the uncertainty of ' time Standard and Poor's and Moody lowered Lileo's the operation of Shoreham as the reason for the bond and stoc k ratings there was little immediate On other issues, Standard and Poor's set the rating downgrading.
Impact on the company, on Lilco's preferred stock at double B minus, down The Wall Street analysts also expressed concern . from double !! plus; the commercial paper rating over the future of Shoreham, noting the lack of. Martha Lipfert, the spokesman, said yesterday, was lowered to B, from A minus three, and the first visible support on the part of Gov Cuomo for however, it should be realized that there is an overall mortgage bonds went to double B plus, from triple il nuclear power and the position taken by the Nuclear impact on the company's abihty to raise funds and minus. Hegulatory Commission two weeks ago in dee'Ta' ring interest investors, wWh in time wdl be retlected in .that it was willing to close down existing plants at higher utility rates. In releasing the ratings, Standard and Poor.s saut 1 Indian Point in the absence of suitable local evacua. Its action is a reflection of mereased concern about tion plans for the areas surrounding the plant. The latest Standard an<l Poor's ratings came in potenhal delay m the commercial operation of The governor yestesday said: " Standard and conjunction with i.dro's attempt yesterday to market Shmcham, which is an inveshoent cegual to mme ) l Poor's is intelested in dollars azul cents. We're. $150 million in general tevenne and refundimt bond 3. than half the company's capital. 300 ) i 1
ed) y ~$_l2f3 DBWS bTi&i3 ?.1!ilstone il shut for rafue!!ng Efe"l"Od m '""**""'"d'"'C"""""' WATERFORD (UPI) - The Millstone II nu. g g y',,l*~. ld,.g.,..,,, u.,,,f _,'.J g, ; *,....- 't cle,ay,,mtwerjant was taken out of service Fri3Ty 4 for a 16-ween refueling and maintenance program, fI, Q~~ Northeast Utilities said. I,7."' Northeast said all of the fuel assemblies will be *
- removed from the reactor for inspection and test.
.., n g...,1 ' C ^" *'""I * , ing and there will be an in-servir.e inspection of the reactor vessel and associated components. RIC IS.,,.:.? When fuel is reloaded into the reactor, about. . tM 2 8 1933 one third of the 217 fuel assemoties will be re. placed with fresh assembles, said Northeast, which gyg:tI.13 "'1'01,260 ewas and operates the atomic generator. SU!!DAT - 142,616 Ncrtheast said the steam gene *ators in the nuclear power plant also will be inspected ar.d repaired and the low pressure turbine will b< overhauled. Connecticut has two other nuclear power plants k i'.- w.s.. M arc:, Jnc. . # SM'NSTON. O f. ICCO3 Front Ecit t Other Pc33 Pc;s Pecs n::.;:T *.T
- .:3, :.'~:::!.
STAR & TRIBU:!E neR:m:a - 227,392 Taizu:lz MAY 2 9 50 SAT & EU:l~ 593,E f' " Feds shouldn't bail ~out Whoops Now comes the Washington Public Power Supply the project's cost rose from $4 billion to 325 billion. .. System seeking a federal handout. The system. Two plants were canceled in the middle of con-L-Appropriately nicknamed Whoops, is a Pacific struction - after billions had already been spent. A "~ Northwest consortium of pubtle anii cooperative third plant, twothirds complete, has been moth-
- ,' electric utilities. Whoops is near default on 32.25 balled, and a decision is pending on mothballing
,, billion in bonds sold to finance five nuclear power the fourth. The single plant not in doubt has yet to plants. Rep. George Hansen, R-Idaho, wants the generate a kilowatt. ~ federal treasury to contribute $1 billion toward
- a. retiring the debt. Congress should decline. Whoops tranean also proposes that all Bonneville ratepay-Cis a regional mees; the region phould clean it up.
ers share the Whoops-debt through higher electri- ~ ca! rates. Given Bonneville co'nplicity in the fiasco, Whoops officials rightly argue that they were pree-he has a good case. The burden would not be ,,,sured into the nuclear program by the Bonneville extreme. Because of the region's cheap bydro-Power Adrninistration, the agency that operates the power, Bonneville customers' electrical rates still federal hydroelectric dam system on the Columbia would be lower than in many parts of the country. - River. Secretary of Energy Donald Hodel, then iBonneville administrator, used his power as region-There's great irony in all this: Bonneville's low cost al energy Czar to push the nuclear plants. Citing hydropower goes principally to customers of public "* inflated energy use projection?,9edel warned utili-and cooperative utilities, such as those that make ."'lles that Bonneville could not ensure future energy up Whoops. Bonneville and its utility customers .. delivery. The message was cle2r: Build the nuclear fought hard against sharing the cheaper power ' plants or else. More than 80 utilities bought into the with Northwest homeowners and farmers served
- _ project Whoops officials authorized five plants.
by investor. owned utilities. Now th'at Whoops has sone sour, they're eager that U.S. taxpayers share ', Calamity followed. Energy demand ' dropped while the misfortune. Congress should have none of it.
/ WPPSS' Plan forLoan Faces UphillBattle As Bonneville, Banks Question Proposal me wm ermer, Jovens.mdaspeace But Bemertue k concemed about sorne at gggg.I,.E - WasMagten Puhuc Power pects of the plan. 'Tm not prepared to say. suggdy sysem faces u W balde trytag we weeM neopt it," says Bomarvine deputy %jj jale .. gj,,, uno es asas,s as sees massa aseet ans it has adualmhtreter Essen R. BateWh. wasmerom e amos decided no seek mass asper esammesetal Ghen WPP58 hans tsads, Gey usuaDy are ser repayment over as many as de ., set pront other s buks p.,, ,,, p . wPPas wants is senare me erset week a yeess, hat WPPSS envideas meelveg frorn presnise of repayment by me tederal Bonne. beaks a erse year creet llee that can be YALL SC. C J N ::!.L vlue Power Admbdstration, but Boemille conned 2 Swyear note hr a maximum h.as mmgtvians about saca a guarantee. Inof e6ght purs. We userstand mat com- --EA5 TERN ED N-comm resi boks a,, ear i.es merchi baks en't =rany c=5*r =r-JUN 13 man enthusiasuc about WPPSS' proposed thing longer $an atout eight years, says MonNING - 640,064 borrower Imis H. Wlanard, chairman of WPPSS ex-WPPSS, construction arm of WasNngton ecutive board's audit, legal and finance stan's public uSty estrtets, needs the committee. Bankers, Reactions money to continue work on its No. 3 nuclear But that would mean that Bonneville, the But bankers apparently haven't ex-power project, widch is about 74% complete. loen's backer, could have to npsy the enum pressed any enthusiasm about the proposa!. Normally, WPPSS Saances its construction 3000 mihlon face amount at the end of eight "I wouldn't recommend this bank to lend, projects by issuing revenue bonds, but un-years. Bonneville would have to coueet,*such them money," said the ut111ues spedalist at t certatoes raised by lawsuits on two other funds from its power sales,wmue, so 2at a major Midwest bank. "I think they're go
- projects have made it impoestpie to issue causes us some concern, says Mr. Rat-ing to have a real hard time of it."
more bonds for project No. 3. As a result, diffe. "What that could do to our rates The bankers fear that the Washington WPPSS has decided to seek noney from makes us very uncomfortable. If you can t usty cu't offer sufficient collateral to pro-commerdal banks. roll over er refinance that, as a consequence tect leaders if WPPSS were unable to repay. Coenrtible Credit Ilne it's too costly." "They need to come up with secunty for the i But Mr. Ratcliffe says Bonneville'lan't credit Itne in the event of bankruptcy," said WPPSS wants guarantees from Bene-rejecting the proposal until WPPSS has had one banker. "We certably don't want to be ville because Bonneville has contracted to a chance to present it to banks. Details stuck with a nudear power plant.' market 70's of the power from the plant. ,an t be worked out until WPPSS and the In San Francisco, CrocAer National Bonneville previously guarateed that bonds banks try to negotiate a loan, "and I thmk Corp., and Wells Fargo & Co. said they insced for the plant would be repaid from we've got to have more details," he says. haven't heen approached by WPPSS and power sales revenue. The remaining 30% of "We're eager to Dad out if there are some the plant's electricity would go to four in-sources that can be tapped. The major 'wouldn't comment on whether they might extend endit to WPPSS BukAmerica vestorowned utluttes, which hold a 30% in-terest in the project and are Snancing their thrust of this exerdse is seeing the interest : Corp. also wouldn't comment. of some of the major banks." WPPSS* executive board voted May 27 to share separately. WPPSS plans to send letters to a handful Eventually WPPSS hopes to refinance the of major banks today, asking if they would. suspend construction on plant No. 3 for three years if it can't obtain additional funds. It bank borrowing with a bond issue, but that be interested in lending, said James D. ordered an immediate construction slow-can't be ensured. So to make the loan at-Perko, WPPSS chief Snancial officer and down, but said that for 30 da/s activity tracuve, WPPSS wants backing from Bonne-treasurer. He said WPPSS hasn't contacted a should continue at a level that would allow a ville, the big federal marketer of electridty. banks about the proposal. But Mr. Ratcliffe says. *Tve been told there have been somel full resumpuon. Since May 27, WPPSS has contacts and th,,e banks are suffidentlyinter 1 laid off 1,350 of the project's 3,380 w i ers-1 I f l
h w' 4 o. InteSt C. y.. era utilitiesi Mothballing No. 3 would not effect u to a c.s es the agency's needs unoer those contracts, he,c: o m7 added. z :n c c, at WPPSSe# (Contissed om page 5) 5* U gz o= (Continued tront page ai - .,o yy) ~~ So BPA adds into its estimate of savings the 6k costs of power that No. 3 would generate but!,o 4 % a j at are that the agency would not be able to sell. P-# 9 That's the reason BPA contends the project f., ; ; ) enn be put on hold for three years but not longer.f, *, '-a o en = 1 Both BPA and WPPSS believe any delay of a u =t o i i neore than three will cost even more, but, i L again the figures quote are different.
- z e
. 3 Bye yene dela would add 81.1 bution to the _. 1 i east of the plant WPPSS accounting, with . Q. g,,, t for the same tems it uses to compute the - ('..@g -. f delay, Britton said. An eight-year delay iweeld oest $1.9 billion. ry ~ Mc.,, e BPA believes it will need the power from No. " * " ^ Putting a==laa** plant on bold is an expen-3 within five years and therefore adds the cost of sive,,,_ ^= -liet just how expensive de*
- not having that power into its equation. But it ponds on who is analysing the cost of the moth i says the net loss to the entire BPA system would tells.
I be about 8150 maillon with a five-year delay, and board voted Friday to put another -{ System ; around $400 million after eight years, said pow-The Washington Public Power Suppl e now-er supply analyst Walt Pollock. hold, after the Benneville Power au
- Figures from beth agencies are estimates.
ation insisted that the cost of that-delay
- Washington Water Power Co., which owns 5 t of No. 3 and plans to fight the mothball-would act be "significant."
v, ratapsyers worry whos'tNrates does not yet have its own estimates on the A change seroes to the right of a Amaimal costa of the delay'WWP vice president for public point - the member of mills per kilowatt bour. ' Joe Piedmont, so, they might find it difficult to judge the sig-relations, said be has seen figures from outside, nificance of figures that have elcht seroes to the sources in the 8100 million range, and "I.would left of the decimal point. consider that significant. " CvF u- %s the confusion 'are the ways The decision to mothball No. 3 ended what WPPNand BFA repressat the cost of the nucle-may have been one of the worst months in the ar plast's delay. . history of WPPSS. WPPSS officials estimate a three-year ' delay. Two weeks earlier, the executive board had on plant No. 3 will add $758 milHon to the cost of. agreed tei accept default on bonds for plants No. the project, supply system spokesman John Brit-4 and 5, and one of the country's major bond- 5-w. rating companies suspended ratmgs for bonds on ton said. constnaction ecsts, payments of intarost when;fe.n + That, figure takes lato aegenst'laflation e' the other three plants. of . The Legislature refused to pass a law that regeoed coussin smaintenGee ef tion,.ruptcy on individual plants, and the rating sus-would aHow WPPSS to declare separate bank-ed-but40t-terminated project' and the cost to maintala the various beenses,s pension remainsin effect. Britton said. i But gloom did not permeate Friday's meeting, Although the plant without mothballs carries I as ratepayer groups sent salvos at board mem-a prieec tag of 44.9 billion,8758 milHon for the l bers, who seemed willing to let most of their' dela is still significant by any measure of ac, barbs slide. One member of the Seattle Light Brigade af-ever, views the cost of the mothball-l: facted the palsied movements of a senile ma-I
- BPA, lag plant No. 3 as part of 1*s ecure system cost i tron, and, flower in hand, bemoaned the pauing pavvidg electricity to utluties and manufactur j, of No. 3 which "never had a chance to electrify *
- all '3e power plants that th agency uses to our lives." ers in tae Northwest. Cynthia White, another Light Brigade mem-It argues that some savings of unpaid workers ber. asked board members to spend some of the - .' salaries and unused fnel should be added into th* 8500 each receives for attending meetings to buy eqeation along with espected losses for higher i an advertisement in the organtzation's publica-. construction costs and interest paid on invest" } tion. Other utihtles have purchased such ads,she
- e meets that are not returnihg money through l said.
"We'll see if we can work it into our budget," power-sales.BPA believes the net cost of mothbalhng No. 3, said Chairman Carl Halvorson. will be 842 million in 1983, and 873 million in ! Carol Dobbins. Ligh't Brigade president, later 1984. In 1985, however, it believes the delay ac-presented Halvorson a jar of red pingpong balls tuall will save 889 million, said BPA spokes-which sbe said were barracuda eggs. man Idosee. The gift was a ribbmg for Halvorson's state-BPA now has more power than it can sell. i ment two weeks previously that WPPSS would Administrator Peter Johnson said Friday the I ageocy is negotiating some short term contracts. not " walk barefoot among the barracudas" byspending all - in the range of two years - with, Southwest,- 5 on bond payments. . r A.=e w
l \\ WPPSS } l to decide r ~ " > 4.20C05*< WASHINGTON. Of First' National' Bank, said there'si Front Edit other fa Of that WPPSS won't know if it
- a t deal of money available"'I PoS*
Pose Pogo SIA~T! E. E/.0:::::rG:I N 38A p{ $ lcan't borrow unless it tries. ~ e Bearti members didn't specify TIMES E %F wwa w what kinds of unoenventional fi-g '2 '7 M eer would.aesk, other' Bob Lane "M ' " "g - EVENING - 246,690 j, p the asoney weeld come j manag ts enke a SUNDAY - 331,060 8 M f*Dorer f.. -a,and alpmega.a6peannun",- WPPgS deposess,today ase- # abangy1======r la retum. cnnsiderkg a resshusing to halt.. mate or, construction on Ithacisar Project 3,c Robert Ratcliffe, deputy BPA Its example of the right admialstrator, said his agency interest and prmei-way to widekis ~~ ' But they agres. pal on debt "ha:. sive search for from "uncon-looked fbr money in many places ventional" sources to permit con. ;)nd has had inquiries from money' struction of the plant, which is 76 pedIBers, but none had substance. . 'Me warned that the Snohomish percent complete, to resume with ; County Public Utility District, un-in a few months at Satsop, Grays, Harbor County. 4 to arra long-term financ. Executive board members '5f' " because relattenship with PSS, got trouble by borrow-the Washington Pubhc Power Sup.. ing 31115 million on short-term ne'es-ply System, meeting in committees yesterday, obviously were relue-to pay for a hydropower project. tant to accept what others offered "We can't be in that position " as simple truth - that WPPSS he said. "We've got to be able to Plant 3 account is nearly broke and demonstrate that it can be paid that no investor will lend WPPSS-back." additional money because of its' BPA has offered to continue to pay debt service on the $1.6 billion tangle of legal and political prob., c* WPPSS has borroweu so far to lems. The Bonneville Power himinis N build Project 3, plus mothballing tration emphasazed those points in'. posses. But BPA san't provide the Wednesday and suggested WPPSS"y 300 railhon WPPSS.riseds to finishpaying foretts HI pereunt a report to board committees consider postponing completion ofj the plant, Ratchife said. Four Northwest privete utilities the plant for three years. Peter Johnson, BPA adminisa own the remaming 30 percent. trator, reportedly was ready to They have warned that mothball-insist today that WPPSS emothball! Ing Ptsnt 3 would be a breach of Plant 3. contract and have hmted they will But yesterday, some WPPSS, sue if work is halted. board ' members instead urged a'. WPPSS'. new managm' g disec-search, for unusual sources of ser, Don Masur, said he $md - bypassmg WPPSS' nor. ordered the drafting of a resoluciori mal ' clal advisers, bond coun
- to take the first formal step to '
set and undersmters, who have shu: ting down Plant 3. If re said WPPSS cannot bormw now. - mon is found within two Louis Winnard, board member,! W still could ' resume citm-asked for a staff report contrastmg. struction and complete the proj4ct, the cost of paymg higher imerest on schedule,im said. ) on unconventional financing with'- Plant 3 has establisheld nuclear the cost of mothballing the plant industry recorti:. Sdheduled for for several years. completion in 1986, it is about ~ Another board member, C.M.' seven months ahead of schedule. Berry, retired president of Seattle-
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V C M Ps3,4/Q..C.3000W,J.,'3,,z WASMfMTON Front Edit. Other Pose. Pese' Pese ~.,6*'d...T.[ CINCI!i!!ATI, OHIQ tiAY 2 7 1983
- Wh00pSl
. l.I EVENING 2"190 303 r Congress ouhht to put up the cost M billion but the estimate "no ballout" sign for the Wash ' has soared to'$23 billion. The . ington Public Power Supply demand for electricity in the System, the Northwest utility Pacific Northwest that the thatis on tha financial rocks. planners saw 10 years ago has The troubled utility has not developed. . been nicknamed " Whoops" and - The upshot is that the ' con-a better name could hardly be sortium of public and priute found. electric utilities that joined in To be truthful, the trouble the project are threatening to foflowed some bad federal ad-default on the municipal bonds vice along the way.The Bonne-that have been sold to finance ville Power Administration, it. created by the U.S. government. Now comes Rep. George in 193'l to market electricity. Hansen, R-Idaho, with a plan from federal dams along the for the federal government to Columbia River, urged local bail out the bondholders and . utilities to undertake the nu-utility' customers who seem clear power development plan' likely to get stuck with soaring Jthat has fallen onits face. 7 ~
- bills.
1 Bu't that doesn't excuse the ' Why should Ainerican tax- . poor planning and misman-payers rescue bondholders who 4 agement on the locallevel. One bought the municipal bonds in Seattle financial analyst was the first place largely because -- quoted the other day as laying the earnings from them are ex- . the problems to "ambiuon, empt from federaltaxes?
- - polluca and no business sense" Why should American tax-
- ~ by persons connected with the payers ball out utilities and
~
- project.
utility customers wholet politi-i Five power planta clans and managers from their i . were sup be built. Two area lead them down a garden
- have been canceled, two are, path?
l g - under construction and the. H~ansen is asking U.S. tax-y fifth is close to completion but payers to pays for a regional hasn't become operative. folly and Congress ought to say The plants were supposed to no. l - - - - - ~ ~ < - - - - ' ' ~ - ~ ^ - ' ~ ~ -
w < Court bars WPPSS bond l trustee from crying ' default' Calasnan. in putting default on er,has made it unlikely that bonds -l By JOHN GILLIE bold, also refused to give the sup-could be sold to continue construe-7 A King County Superior Court ply system access to a multi-mil-tion until the court cases over the judge's ruling apparently has nos dollar encrow fund the court two terminated plants are re-sbved off the threat that WPPSS set up to receive payments from so gl Malesca said Calaman recogrg gg ',,g"o decide ' the 84 stilities that own the plants. t will default on some $3.25 billion worth of heads sold to bdid two teradament IM Gnat E he released those wheter to put Se two termina% I'"' N I Judge E. funds to the supply system, the oder &a Se supply lag ca.a motion Tassens attor*. lilEties weeld never get their begin seHM M ney Albert Malanca, late assesy heck even if the bood system yesterday leased an order apeaments were later ruled in-even critical machanical equip-biting the bood trustee, the - valid. ment to raise money to pay bills. cal Bank of New York, or any of WPPSS has been warning for Once that critical pment is the bood holders from issuias a smooths it would soon have to step sold, it may be y impossi-default notice to the Washington over the brink of default. . ble to restart plant construction. Public Power Supply System. The supply system's executive De Northwest Power' Planning WPPSS' treasury for the two board is conducting a series of plants now stands nearly exhaust-special meetings this week in Council has predicted those two ed, and the y system had Seattle that could have led to a plants won't be nae===ary to meet warned it be unable to default on the two plants' boods, iteurrtepon's power needs..for at. make its payments this month to With the default question appar. ledst 30 years. g ~ frc63n..[dgence,.7~jnE T the bood fund being held by Chem-ently handled by Pan== nan's order, !c ical Bank, thus triggering the de-the board still faces two major de-cisions. wasumaren. o.e. mooos fault notice Malanca, who represents the It apparently will decide nom wo o,w largest group of the terminated whether to mothball its plant 3 Page Page Poes plants' owners, praised the judge's construction project at Satsop. It ruling. also is scheduled to consider TACC'!A, YlASHI:ICTON "This was a very significant, whether to permanently forego NETS-TRIBUNE tremendously important, sensible any possibility of restarting coo-EVENING - 100'75T thing the judge has done," he said. struction on the tesminated plants ,3 I 3 U N E,,- w- -,,E "It's what the utilities have been 4 and 5. saying, 'For God's sakes, freese Plant 3, which has been on a SU!! DAY - 104,676 everything la place 'til we can get slowed camatraction schedule for a ruhng '" several months, will run ont of t1AY 2 5 g Chemical Bank and the plant money soon unless the supply sys-owners have been locked la a legal tem can nell more tends or enless battle for months before Coleman the plant construction is halted. and the state Supreme Court over De plant 3 project, plagued by the question of the bood agree-cost cverruns and delays during mentr' validity. Its initial years, now is setting in-I The judge's ruling yesterday is' dustry records for cometraction valid until the coorts can decide if progress. De plant is 74 parcent the utilities are obliged to pay complete. The shadow of the l those debts. plants 4 and 5 terndnation,howev _}}