ML20115A568

From kanterella
Jump to navigation Jump to search
Petition for Suspension of CPs & Nuclear Fuel Shipments & Conduct of Investigation to Ascertain Whether Central Area Power Coordinating Group Financially Qualified to Design & Construct Facility
ML20115A568
Person / Time
Site: Perry  
Issue date: 03/08/1985
From: Hiatt S
OHIO CITIZENS FOR RESPONSIBLE ENERGY
To:
NRC OFFICE OF INSPECTION & ENFORCEMENT (IE)
Shared Package
ML20115A567 List:
References
NUDOCS 8504090434
Download: ML20115A568 (18)
v • d • e


Text

{{#Wiki_filter:. ~ s .T .4. b l'/ 1 March 5, loo 5 ., h, t :,--s c_., Tens e-A M

r.., s, w
v e.4.

.n TW CLE A F REGULATORY COMMI55 ION E e'e e toe Directer. Orrice er Inseserien ene Enforcemene

n t-e Potte-or

)

m. r y r r a, u,
r. u.e.- u :.

.m r * ^ v. e t P. '.- =. .r e.

a. r.-

r a. . - - u v p. 1- -. p. a- ,.,w r: -L. e --i. ) (Fer y Nu:lec- ::wer .lont, ) Units 1 Cnc 2) )

ETI ?.OH r0R
r. M r. : c. r u e. v c 3. T r. o, n O'i: Oitirs s F:- Fes;:nsitie Ene gy, nc. ('CCRE') wereby
etitt:ns v r. e !.irector er the Orrice er Inspection one Er.r: cement, nursucnt to 10 CFR 2.006, for emergency oc' tion necessory ec ensure the health one sorety or the public.

I. Descriptien er Perzezener Fetiticner OCRE is o ncn-profit Ohio corporotion contosed of =e r ns resicing near the nuclect genercting rceility p enently u,=e r c c n s t r u c t i s t, known os the Ferry Nuclear Fewer Picn, 10:cted i t. Lake County, Ohio. OCRE is o nukli: interest

Pre-i:: tie-m;"i ; os its ;:ci t*e er: :ti:r e r sore.

er:n=ri:ci, one env r:ntentc11y responsitie e'nergy techn: cries, one as presenti =cncentrating on nuclear sorety, ocp.E is on interven:r porty in the operating license prC0eeding for the

e r r :. Pisnt, j
:. - T r. e c::: ec-one:rg Ene sency Re; victory A: tier 7.e :levelone Elecers: :11ueinoting cc., Ohs: Ed:s:n C:.,

WOofoyyn

2 L. Pennsylvanic Power Oc.r Duquesne Light Co., one Toledo Edison 00., kncwn ecliectively as the Centrol Areo Power Cocrdincting Grou: ('CADCO*), hcid construction permits CPPR-148 one CPPR-

ac,
ssuee May 2, 1577, for units I one ; or the Perry Nuclear Pewe.r Plent.

CAPCO is actively constructing Unit 1 or Perry: 1sttle or nc werk :s proceeding on Unit 2, about 45% complete. CAFCO :s oito building a third nuclear unit. Beaver Volley litM 2 i t. Pennsylvonio. l 2. The Perry cps were issued pursuant to o finding, inter olio, that CAPCC was financially qualified to design and construct the clonts. This is still_c Commissien recuirement. See 49 Fed. Feg. 25747'(Sept. 10, 1984). ~ 2. The basis for said finding it documented in the CP 'stoge SSER 4, issued January 1977. At that time, the cost of Perry was projected to be $2.181 billion. The projected dotes or r commercial operation for the units were December 1991 ror Unit 1 cne eune 1952 for Unit C. The eene rot:ngs rcr ene CAPC0 companies, os re cree: t r. SSEc 4, were os rellows: Ao, Mecey's, AA, 5tonecrd & Poor's: CEI Or.ie Edison - A, both Mecey's one 5 CPI Pennsylvonso Power - A, both Mooey's and S&Pr po, Mcody's, A. S&Ps Duquesne Light Tclede Edisen - Eco, Moody's, A, S&P. 5. Ime NRC 5;off moce two basic ossumptions uncerlying their f i r.c n :i c,1 qualificatiens onalysis. They assumed that ' rotes

3 t Will'he set by the oPPPCPriote regu1Gtory Ogencies t0 Ot least

ver the : st Or servi 0e.. including the cost or CopstGl* and that 'victie carital markets will exist.'

e, iness ;cneitions hove enonged crosti cily sznce 1977. The Perry pricetog is ncW estimated to be s6 tillion. Unit 1 olone is projectec ot $4.2 billien. The completion eote for Unit 1 (cccmercici cperation) is claimed by CAPCO te be lote 1985. There is scee c ntroversy about the volicity of this date. E.g. t h e ?? F.C ' s Caselcod Fereccst Panel pecJects icte 1985 cs on cetimistic ruel icod dote. Unit ; moy never be c:mpleted. 7. Current CAFC0 bond _.rotings are (taken from February 1985 M::=y's Bend ce :re one standore & P:er's Bone Guide): CE! k?, M2:dy's. EEE, 5 gps Chic,Edisen - Boo 3, hoody's, BBB, S&P Pennsylvanic Fower - Bcc3, Moody's. BBB, S&Ps Boot, Mcody's, BBB+, S&Pi Ducuesne Light 7:le=e Ecir:n - Ecc3, Moedy's, BE+, S&P. 5. Tne Fu 1:e Utilities Cennissien or cnic hos n:t set rates ~ such that CAFCC con recover the cost or capital. The FUC0 has ciscilewee C:nstrue irn Work in Fro:ress rer Perry int the rote dose, and Mcs grcneed rcr less relier enan was sought by CAPCO. See Exhibit 1. Future rate requests may cisc be limited, 05 the FUC0 mas c r e e.* e d studies into the ecsts one erriciency or Perry

nstructi:n one on whether CAPC0 will hove excess generating
c:c::ty.

See E hitte 3, 9. CAPCO's ceility to ottoin constol threugh stocks one cones

is likewise precarious. The low bone rotings cited above will eiscourage investers. Investment services have warned oscinst investing in CAFCO. See Exhitit 2r in which the CAPCO Utilities ce roved 'C' ('A' being the best, 'D' ene worst, in teres of investor risk). 10. The end result is thot CAcC0 is in a bind for money. Their =recarious financial position is a motter of public records see Exhibits 4 ond 5. Exhibit 3 cisc denenstrates the ill financial necith cf the CAFCO utilities. Therein it 12 stated that G hiyh percentose of AFUDC is c sign of low cuality ecrnings, and that a ' weck situction' is evidenced when substontial anounts have ceen invested in nuclect construction elative ;c common equity. Note that Exhibit 3 icentifies the percentose of common equity re=reser. red by nu:1 eor :cnstruction and the percentage of comcon scir.in;s reFresentec :: AFUDC For CEI c5 104% an: 54%, rese::tzvely; r:r Ohic Edison, 11o% and e4%; fer Ducuesne Light,

  • .'.:r.d

$1%; and r:r

lee: Edison, 151% cnd 100%.

1;. IA:CC's fironcial =r::lems hcve led rc CE 's seerine (cnc gettirg} Voge OCMCessions from the trade untCDs wh0le mem:Grs WOPP ct :9PPy. See Evriba; c. 1[. Inf0rNC.tiCr reveGle: TC OCEE frCE OCDfasent:01 Slur 0es sndicates that ene workers at Perry cPe very angry with the i

Or. cessions, and there is talk of sobotoging the cons truct:en work.

Specifically, erF10yees cf the cointing/cccting 00ntrc tct, Metp1 weld, have threatened te mix the Osatinis a n c c r r e c,t l y so that they will ficke off within ; year. e

3 II. The some sources revealed thot nuclear fuel will soon be celivered te Perry for Unit 1, n:t because the unit is recey fer c:erotion.(o fuel rod expert has indicated to 00RE's sources tnot Perry Unit I woulc not be ready for comnercial Operatien until late 1ccc), but because General Electric is charging CAPCO toc much to s tcre tne fuel. Eorly receipt of the fuel could expose it te soectose fr0m disgruntled werkers, 14 Secouse of CAPCO's.cesperate need to get Unit i on line by tne end Cf the year (see EVhibit 4), the EOtE9tial exists tnot the remaining ccnstruction and testing may be rushed and compromisee, II;, The Relief Requestec Eecouse of the facts cutlined oeeve. OCRE requests that: 1. CPoR-14c and CPPF-14c be inmediately suspenced, pending on 'o=Judicotcry finding cf CAPCO financial copobility, os rendit :ns new e s:i s t which woule wortant t'he commission to refuse to grant a licsnse On on criginol opplicatien (10 CFR

c. a.. s. C.., ;.,

'O, oil nuclear fuel shipments te the Perry site ce noite=; 2.

  • ".v e i t t s ? t i C T: te 00Deu0ted int: V ".e t h ? r CAFCC if fznone:cily cualifie= te cestgn sn= construct ene Ferry focility, and whether octions resulting from CAPCO's financial croblems have causec or may couse unsore conditions ot Perry, ir:1uding inese cue to sobetoge ey angry workers the c=ecottng license croceecing te suspending pending o f.

G=Judacotcry find:ng of rinoncial cocobilityt

_e. w. s + 5, on investigotson me conducted concerning the true state of rea=iness of Unit i for fuel lood 6, o precese ng be instituted to determine whetner CAPCO : s r - n e r. : : a l l y cuolaried to design one build tne Ferry focility; 7. -o r. y Other relief which the Director may ceem just one croper. Respectfully submittee, ,/ O Susan L. Hiott OCRE Representative 5275 Munsen Re, r,e n t e r, OH 44060 ISg 4s m e r, _ " 4 % C. gwAw/ www w+w =

  • %e t

e 4 e,--- ,m, c --. ~...,. w. ...e,-,-..,,'w,, 4..c.

M IBtT I ~ lr. THE PLAIN DEAt.ER. FRIDAY, MARCil 8,1ti8S.[ .s a a

  • w

+ b..' e, ,e,. y f.. ,,,9 0b e.. .s..; .s. e z .en CEI den, ied4160 diilhdM )ofRks.3 $I - f,g ,4 * .r . 'S t. . M t t-4.,. . o r. 8.g ; g t, g...t,:, si. r,p,4 -

  • ~

g re a.,.,,, ,,,.,, j g f . / 6 Cy JAMES LAWLESS ,The five-membe'r PUCO,speelff i "I tmdetstand justice has finally.:S tenth' of* what they asked for. It'is, stur wmica

cally excluded from the requested been rendered " said Joseph lkteissner 4 staggeringi."

i COLUMBUS - in what was called., rate increase interest costs on money ( a staggering setback for Cleveland.,.CEI borrowed for construction work 8, a Cleveland lawyer who represents

  • u Steve Lorton,fa CEI spokIsman'3

.the Greater ClcVeland Welfare ItightM called the decision very disappointing # Electric Illuminating Co., the utility's.. In progress (CWIP) at the Perry plant.,; ' Organization.,I think it is a good, fair since customers are paylng less than decision w cas slashed to $19 million yesterday, cerned about the long-term effect yes.} coming., hich has been som proposed $180 million rate increase CEI officials said they were con i t ,_;j/ f 'We have to" rec'Ogh! 't!ia terday s PUC0 decision would have on,-p. 7g H'[g,l'ttronhesb'VEbrdeV'.'lncrease of:th!!; by Ohio s utility commission. The Pub!!c Utilities Commission of". rates.They said CEI would appeal the rder to corne out of the commissi Ohio also ordered a study of the cost decision and the company might.be#said William A. Spralley, head of,the the investment community," Lorton forced to quickly seek:another rate, Ohio 0fficeof Consumers *C.ouhsel.',,*'W"said when asked overruns at the $6 billion Perry a ny'< increase. ._.1, :. n. 7.,.w,y..

credit ratings would likelf be a nuclear power plant and a study to determine !! CEI has excess electric.. Consum, er; groups Were delight &l } fWfhaTe fought for a number of ' by the reduced increase.

generating capactly. In 1971, Perry. that construction costs for the Perry. years for these issues and now. they. g ' plant were denied by.the PUC0,3,,,J. ; are supporting,us," he said.:*This is a G S-3.. CONTINUED ON PAGE 13-A. cas estimated to cost $1.2 billion. f 7 ~. ....y',.O W tyP.*.,.W!!!N.n }l,'.Hi.:. h, k,:,dl;shyh*;;fC.$$sCh. W.

  • L. *.:.,.'

w m...... r.. w..n.v.. xm. m... CEI dem. d $160 milh..o n 73..j g. 3,;..,.. 3,.; ~ e i Toledo Edison'to' seek [an cmergency, Millers'ald CElIs especially con-guntilthe plantiscompleted. - ,i 5 FROM PAGE 1-A This 11 the first rate increase for rate increase, and that:was cut in half cerned about the long;(crm impact of rToday's decision proves the sys-DEI since January 1983 and will by the PUCO.,. *, y :, the dectslors on customer rates,, i.p.dt tem works," Voinovich said. amount to about 45 cents a month Glorla t. Caylo'rd,aY'UC0 commis- "CWIP 'ntaO* $od. ecgiottile,t!. S ilut Meissner, who has sald consu'm g more for typicalcustomers.,,,, stoner, joined in the unanimous rate sense," Miller said in the statement. ers lose when they lose and lose when i CEI, Ohlo Edison Co. and To!rdo'f decision but objected to denying CW1P' "It. assures lower borrowing. costs' Y they win,had a warning yesterdayi... Edisen Co. now all have been denied ' to CEI.,She contended the t.cmmis 'which saves money forcustomers who . Interest gosts on Perry's construction. ston's view is moch too short:!ghted " eventually have to pay thme costs., 1*The problem is that CEIis likely to, i se p inan al s g iPerry unit I is supposed to be done and, in the long ruh, Will cost custom-And it helps to phase new,facilitics eg, 9, ec IngMM,yyshortsightep,,minat.g into rates, reduemg shock. Ell by the end of this year, but the PUCO'~ ers money.j y r.;p j..t 3.g could well be penalized by Wall Street yesterday reflected skepticism about,,,;CEI Pre'sident' 111'iiard'il Miller y,,g;pconcerns, which could end up hurting i c the completion date and cost of the ' said in a statement CEI will seek a' Mayor' George V, Voinovich lauded.. the customers., g... g. g g.,,.,, first unit. - rehearing on the CWIP issue, as well. yesterday's decision and said it is not ** '"Ilcmember,'we are all stuck with The denial of CWIP prompted as other, items in yegterday's decision., proper to include Perry costs in rates Perry." p. sc . A. ..[ a %.~ J's' .,{

.~ EX.O iB iT L THE Pt.AIN ITEAt.ER. FIUDAY, MARCll 5.1985- _.c_..s ,: i ~ s l PUCO.to analy"zemicej: ~^ !,g ,. kplan

y Lof Perry,nnelea;,,r,...

...q.g,ti ! b ", ;'U

  • l:.9k.,.1[

/j ;,' Y, /M*,'.l k ' built by CEI with 'Ohlo Edisori Co?f OnPerrycosts he,1 f said,"Therc is no.- i' Toledo PdisonCo.and two Pennsylva-? e question that the end costs of Perry Dy JAMES LAWLESS

  • differ from thou originally pre-nia ntilities.

COLUMBUS - Over the next sev-mined many times in other areas and, { Predicted tu cost.$1.2 billion. Now eral mooths,.the staff of the Pubtle Utilities Commission of Ohio will -with Perry 2 about half done and con. examine whether $6 billion is a rea- ..t*.,.. hasreceivedhighmarks.P'Intilally,. 'struction essentially stopped on thatiunit,.the plant is es sonable price to pay for a nuclear ,, Quality. Inay cost fnare power plant. Y It "**"I PUC0 ordered its staff to do such a. f, ccrn ne ist bes w y o 'i - Chema said utility etists in Ohio are - study and a second one to estabilsh. bminessinthelongrun"hesaid..t.,.- above the national average and he whether Cleveland E!cetrie !!!aminat-a'111 Ing Co. will have excess generating Ity study, Bailey said,"If the PUC0Is.l..: believes.they should come down.: On the question of the excess capse" 6-capacity in the future. trying to sort out the various ways of :. L"It is in the best Intere' t of the stat (:I. s The studies should establish d the company to get these rates whether the Perry nuclear power :trying to decide how much reserve;j an. capacity any utility might need, that " down," h plant was effielently built and mightbehelpful". g. todav's decision will tmpalt the healthi of this company.(CED."..The utility whether C a ned its generating the PUC0 messageis this "We have a'3 yesterday was granted about $19 mil-I' Those same studies shou!d help to - general concern about the overall.[Ilon of the $180 million it.l.id asked, the PUC0 forinrate h;kes. 7.. costs of the.cnnstruction program and prove how eflective the so-called the generating capaeltyof CEI.t:f M. Chenia'iitso offcrM a bit of 'advic'e a reformed PUCO will be in helping uti. 4 "We are concerned that the capaN for Wall Street, which has been skit ' .lities and custemers establish livable. ~ Ily be commensurate with the,needs'ftish abotit this new commission in. . rates and reliable electricity.,, Ohio.,'; j*,,,;.,, M-,,,, y ' J. Lee Bailey, a 'CEI spokesmaii,~,'of its territory.",,,,..,,,y.,,, " Good regulations are not equivs : said the PUCO study of construction 4ye. Thomas Chenia. presiding ~as PUC0; chairman on his first major case,said. lent costs was not unexpected. !!e said a ;f no budget or timetab!e had been set thing.It,wants.(af. Wall Street similar stody will be done anyway in Pennsylvania because Perry is being ".for the two studies. apparently thinks),"he said., A .s u '. - W .......... ? 1 ;.;.; a e.. ' ,.s

64ta rr 3 Ug!-W Nh S)$d S s cm.,:y.f.f ),E. W.w.F@ % d a e M.O. @.s .cs. g Yi.5 0 j M j &mMW.m s.s A w m$ F M. i Electric Utilities & i it i e@m*w w.ecba :- 4 a Nuclear Construction: i 7.h n w ii n M e.4mWMd ? Risks & Alternatives i M,.m.ww%W$h.$744:d IMMF l mem M e.-%..;,;u.-w, n v ~w e,a et e.g#Ed C#"*3ME C"8%*@ ] S mmary Recent months have been treacherous for shareholders of electric utility companies involved in nuclear power plant construction. While the financial, regulatory, and political problems of nuclear construction have been a concern for some years, investors have been stunned by recent developments at several nuclear projects. Perhaps the most spec-tacular example to date is Public Service Company of Indiana's 65% dividend cut and abandonment of its Marble Hill nuclear project, after investing over $2 billion. While admittedly an extreme example, PIN's troubles indicate that the risks facing companies heavily involved in nuclear constru: tion are substantially higher than many had recognized. Given these higher than recognized risks, we recommend that investors review their electric utility h:! dings for nuclear construction, involvement to determine if the issues still meet their investment objectives and risk t:lerance. In this report we discuss some of the risks of nudear construction. In addition, a table is included listing the major investor owned utilities involved in nuclear construction along with information on the extent of their in-volvement. Ea:h cornpany is ranked according to our view of its nuclear construction risk level. The discussion ani! table might be useful in deciding whether to hold or sell current positions. We have also included a list of alternative income investments fer those moving fttnds out of utilities involved in nuclear construction. The Rhks of Nuclear Construction Current nuclear construction projects were conceived when the projected load growth rate for electric power was substantially higher than present estimates. In addition, before the Three Mile Island accident, studies showed nuclear power to be less expensive, cleaner, and safer than alternatives. However, increases in the price of electricity have had a stronger dampening effect on load growth than was anticipated. Changing, increasingly stringent, and often retroactive regulatory requirements; the high cost of money; and the inability of most companies to earn a cash return on money invested in power plants until tiiey began commercial operation have contributed to the soa2Lig cost of nu: lear constru: tion. Electric utilities have responded to these developments by cancelling scores of units on the draw. Ins beards or in early stages of construction. As the problems of cost and need have intensified, even projects well under way face the possibility of cancellation. Currently, a nuclear construction project faces a number of risks. In our opinion, tiese risks can be broken down into three general categories: (1) the construction and licensing risk, (2) the financing risk, and (3) the rate treatment risk. While it is helpful to consider each of these risks separately, they a!! directly affect the most basic problem of nu:! car construction its high cost. The construction and licensing risk concerns the ability of a company to build a sound nuclear unit which meets Nu: lear Regulatory Commission (NRC) regulations and is thus able to receive an operating license. Not only must a nuclear unit be built in accordance with rigid specifications, but the builders must also have the necessary documen. tation to prove it has been properly built. The recent denial of an operating license to Commonwealth Edison's Byron proje:t demonstrates that meeting NRC requirements can be a problem for even the most experienced nuclear builders. While we think Byron will eventually be granted an operating license, the cost of correcting deficiencies and refuting inaccurate charges as well as the carrying costs of dela%ng a multi billion dollar project are tremendous. In an extreme case, construction quality problems can even threaten the completion of a nuclear unit. Because of apparent construction quality deficiencies, owners of the Zimmer nuclear unit, Cincinnati Gas & Electric, Dayton Power & Light, and American Electric Power, have decided to convert the plant to coal. While Zimmer is supposedly 97% complete with about $1.6 billion invested, Bechtel estimates that it could take two to three years and an addl. tional $1.2 to $1.9 billion to correct Zimmer's problems and receive an operating license. Of course, the coal conver-si:n plan raises a new set of risks and uncertainties for the partners. Long Island Lighting's Shoreham plant provides an example of non-construction licensing problems. Local government officials refuse to cooperate in designing an emergency evacuation plan for residents near the plant site. An acceptable plan must be established for Shoreham rreundnnfMmwa7 mratirnlicense from the NRC.

o hiany utilities have had difficuhies handling 2h'e complexity of nuclear construction and its strict quality requirements. The ever changing regulations of the NRC have added to the task as well. Since the NRC is compelled to investigate thoroughly any serious claim of construction quality deficiencies, any nuclear construction project can be subject to costly delays at any time because of real and/or alleged problems. Besides those noted above, the following com-panies' nuclear construction projects currently have ~or in the past have had significant problems with the NRC: Central and South West and Houston Industries (South Texas Project); Central Hudson Gas & Electric, Long Island Lighting, New York State Electric & Gas, Niagra hichawk Power, and Rochester Gas & Electric (Nine hiile Point r2); Consumers Power (hiidland); lilinois Pow er (Clinton); hiiddle South Utilities (Waterford 3), Pacific Gas & Elec-tric (Diablo Canyon); and Texas Utilities (Comanche Peak). The' financing risk concerns the ability of a utility to raise and/or internally generate the funds needed to complete construction. hiost companies building nuclear are under considerable financial strain and must raise most, if not all, of their construction budgets from external sources by selling common and preferred stock and bonds as well as using bank lines of credit. With depressed common share prices and low bond and preferred stock ratings, raising money is proving costly and difficult for many utilities. An inability to finance construction could lead to the cancella-tion of a nuclear unit. In our opinion, companies such as Consumers Power, Long Island Lighting, and Public Senice of New Hampshire face some of the most severe financing difficulties. The rate treatment risk concerns the ability of a utility to include its nuclear investment in the rate base and earn a cash return. Since adding costly nuclear units to the rate base under normal regulatory principles could result in 30% to 60% + one time rate increases at many companies, it appears that public senice commissions in many states will adopt phase-in plans whereby rates will be raised in several steps over several years. While this may be the best way to ensure these plants eventually earn a return, a phase in must be viewed with skepticism by investors. These companies have been financially weakened by their heavy construction programs and a phase-in can only delay sorely needed financial strengthening. The resulting delay in cash flow improvement may restrict dividend growth potential and the companies will be heavily reliant on regulatory implementation of the phase-in at each interval. Companies that will be completing high cost nuclear plants and cre or could be phase in candidates include: Consumers Power, Detroit Edison, Illinois Power, Kansas City Power & Light, Kansas Gas & Electric, Long Island Lighting, Middle South Utilities, Northeast Utilities, Philadelphia Electric, Public Senice of New Hampshire, South Carolina Elec-tric & Gas (SCG 181/2), and Union Electric. It is also likely that some companies will see significant parts of their investment in nuclear plants excluded from the rate based on findings of excess espacity and mismanagement as commissions force utilities to absorb some of the costs of their nuclear units. The resulting write offs or reduced returns on investment will hurt profitability (earnings). The issue of mismanagement has already been raised regarding the Zimmer and Shoreham plants. The New York Public Senice Commission staff has recommended that 51.6 billion of Shoreham's estimated 54.1 billion cost be ab-sorbed by shareholders due to mismanagement. In California, the prudency of expenditures on the recently completed San Onofre 2 & 3 nuclear units owned by Southern California Edison and San Diego Gas & Electric (SDO 19 3/4) are under review. Pacific Gas & Electric is likely to face a similar investigation of costs at its troubled and long delayed Diablo Canyon project. The more troubled and more expensive nucleu projects are most exposed to mismanagement charges,in our view. Companies which may be penalized for excess generating capacity when they attempt to add completed nuclear units to the rate base include: Cleveland Electric illuminating, Consumers Power, Duquesne Light, El Paso Electric, Kansas City Power & Light, Kansas Gas & Electric, Ohio Edison, Pennsylvania Power & Light, Philadelphia Electric, Public Service of New Mexico, and Toledo Edison. Those companies facing the highest nuclear construction risks are ones who have invested large sums, relative to their size, in nuclear units that may be cancelled. In these cases, the dividend paying ability of the utility may be impaired depending upon the regulatory response. Those nuclear trcits facing high risks of cancellation, in our opinion, are highlighted in boldface type in the accompanying table entitled " Electric Utilities involved in Nuclear Construction." At least six companies have dividends which we regard as speculative, i.e., the dividend could possibly be reduced or omitted depending upon a variety of financial and regulatory developments. The six companies are: Cincinnati Gas & Electric, Consumers Power, Dayton Power & Light, Long Island Lighting, Public Senice of Indiana, and Public Service of New Harnpshire. While Public Service of Ir. diana has already cut its dividend, its ability to maintain the reduced rate is largely in the hands of its regulators. Other companies with very low dividend security, in our opinion, include: Central Maine Power, Philadelphia Electric, and United Illuminating. (Subsequent to the prepara-tion of this report, Long Island Lighting announced the omission of its common stock dividend.) 2

E.tplanation of Table. " Electric Utilities Involved in Nuclear Construction" The accompanying table lists major investor-owned electric utilities involved in nuclear power plant construction. Several recently com;:leted units which have not yet been fully included in rate base are excluded from the table. These are: LaSalle 2 owned by Commonwealth Edison; McGuire 2 owned by Duke Power; San Onofre 2 & 3 owned by Southern California Edison and San Diego Gas & Electric; and Summer owned by South Carolina Electric & Gas. While most of the data on the table li self. explanatory, the following items require explanation: i Nuclear Construction Risk Rank - This letter represents A. G. Edwards' evaluation of the level of nuclear construc-tion risk currently faced by a company. This ranking ignores important investment factors not directly associated with nuclear construction exposure and does not constitute a recommendation to buy, hold, or sell the s' cares of a given utility. Since accurately measuring and differentiating risk levels is impossible, investors should view the ranking system as crude. Major factors taken into account include construction, licensing, financing, and rate treatment risks. Since circumstances can change suddenly, the level of nuclear risk faced by a company can also change abruptly. The letters of the ranking scale denote the following: A - Nuclear construction risks are significant but are not expected to present major problems. The common dividend is considered secure. B - Nuclear construction risks are high but the common dividend is considered secure. Earnings may be hindered by negative regulatory response to nuclear investment. C - Nuclear construction risks are quite high but the common dMdend can probably be maintained barring major negative developments. Earnings may be significantly impaired by negative regulatory response to nuclear investment. D -The highest level of nuclear construction risk. We do not consider the common dividend secure. AFUDC as Percent of Earnings For Common Stock (12 months ended September 30,1983)- AFUDC or Allowance f;r Funds Used During Construction, is a non-cash credit to earnings that represents an estimated cost of capital invested in uti!*ty plant under construction, but not yet completed. Most regulatory authorities do not allow utilities a return on plant investment untilit is productive, even though lead times for major projects may approximate ten years or more. Consequently, utilities accrue and record AFUDC on their invested capital until the plant goes into operation, at which time both the invested capital and the accrued AFUDC typically go into the rate base and begin producing cash returns. A high percentage of AFUDC is regarded as a sign of low quality earnings, since AFUDC does not represent a cash return from operations. 3

Heesete tienesses I elv+d Im Nortrer Ceaser esloe. Cor en explacmaion of the dose inetoded le lhes table ese pese 3.) Investment Nucicar Scheduled In Nacicer Constrection APUIC es Nudeer Nuclese Commercial Aprrosimere Estimated Units Under Common Investment % of Earnin8s re of for Common NYSE Cuvrent Constructica Units Opermelon Percentese Cost Construction Equity as

  • "l*ay Symbol Prke Risk Rank

(% O wned! Date~ Complete' Per KW" (9/30/83) (9/30/03) Common Fquity (9/30/81) nerken Electric Posest' AFP 16 3/4 A Zimmer (25.4%) 1991 NA NA 5 475 Mil (Nos) 5),550 Mil 13 % Sl% risone Public Servke AZP 19 3/8 C Pela Verde I (29.8 %) 1984 99 % 52.270 1,649 I,514 109 82 Pelo vende 2 (29.8%) 1985 90 2,270 Pelo Verde 3 (29.8%) 1986 81 2,270 linesie City Eintrict ATE 28 A Ilope Creek I ($%) 1986 80 3.550 123 (Oct) 407 30 .57 Musse Hydro Electric BANO* 12 3/4 NR Seabrook I (2.2%) 1986 72 3.913 69 56 123 95 Seabrook 2 (2.2%) 1990 22 3,983 proline Power & Lisha CPL 28 t/4 8 e lierris I (83.8%) 1986 80 2,673 I,388 (Nov)' l.561 89 69 retrel O South West GR IS B South Temes I (25.2%) 1987 47 1.004 750 (Aus) I,785 41 34 South Temes 2 (25.2%) 1989 23 3,004 rettet Hudson Oes A Elec. CNH 20 1/2 C Nine I tile Point 2 (9%) 1986 80 4,400* 238 242 95 45 retrel Maine Power CTP I4 D Seabrook I (6%) 1986 72 3,913 259 298 87 70 Seabrook 2 (6%) 1990 22 3,913 Millstone 3 (2.5%) 1986 70 + 3,000 3,913 90 (Oct) 98 92 67 retraf Vermont Public Ser. CV 14 7/8 C Scabrook I (l.6%) 1986 72 g-3.913 Seebroek 2 (I.6%) 1990 22 Millstone 3 (1.7%) 1986 70 + 3,000 Wicioneel Oes A Electrk* CIN 82 5/8 D Zimmer (46.5%) 1998 - NA NA 622 344 74 55 leveland Electrie 10em. CVX 17 3/4 C Perry I (31.1%) 1985 91 2,l60 1,338 1,280 104 $4-Perry 2 (31.1%) 1988 42 2.140' 7 Bearn Valley 2 (24.3%) 1986 75 3.670 pmmonweelsh Edison CWE 23 1/2 B Byron I (100%) 1985 , 92 1,682 4,245 4,470 95 61 Byron 2 (100%) 1986 67 1,682 Braidwood I (100%) 1986 70 I,596 Breideood 2 (100%) 1987 54 I,596 memon=eekh Ener87 Systern CES la I/4 5 Seabrook I (3.5%) 19n6 72 3,983 119 193 62 28 Seebroek 2 (3.5%) 1990 22 3,913 ,onsumers Power CEIS 11 3/8 D Midland 2 (l00%) 1986 84' 3,265' 3,000 2,205 136 102 l Meessed I (Ice'el Uncertain 3.265' kyson Power O Lighs' DI'L I4 I/O D Zmuner G8.8%) 1998 NA NA SOS 718 78 68 preis Edison DTE 14 1/8 8 Fermi 2 (#0%) 1984 98 2.800 2,050 2,071 99 lit the Power DUK 22 3/4 A Cele =be I (25%) 1985 99 I,703 379 2,581 22 57 l Cata=t e 2 (25%) 1987 65 1,703 wluesne Light DQU 14 3/8 C Perry I (13.7*e) 1985 91 2,613 652 945 69 51 Perry 2 (13.1Tel 1988 42 2,144' Desen Valley 2 (13.7%) 1986 75 3,549 l ptern UtSitles Assoc. EUA I4 t/8 C Seabrook I (2.9%) 1986 72 3,913 200 (Dec) 153 131 93 Seabreak 2 (2.9's) 1990 22 3.983 Millstone 3 (4.0%) 1986 70 + 3,080 i Paso Electric ELPA' 12 5/8 8 Pelo Verde I (15 8%) 1984 99 2,270 352 424 201 93 ~ Pelo Verde 2 (15.8%) 1985 90 2,270 rela Verde 3 (15 M) 1986 81 2,270 dburs Ces O Electric l'GE' 17 7/8 NR Sesbrook I (0.9%) 1986 72 3,913 38 (Dec) 19 200 214 j. Seabreek 2 (0.9e ) 1990 22 3,913 i e Millstone 1 (0.2*.) 1986 70 + 3,000 stf States Ut!! hies GSU I2 C River Bend I po%) 1985 80 3,500 I,640 (Now) 1,294 127 66 suston Industries HOU 18 $/8 8 South Teves I (3n.8%) 1987 47 3,004 807 2,002 39 47 Saush Teses 2 (30.8%) 8989 23 3,0M inoes Poen IPC 59 5/8 C Clinton (80%) 1986 82 3.200 1,617 1,818 I46 50 sases Cky Pe=n A Lisht RLT 17 I/2 8 Wolf Creek (47%) 1985 90 2,322 859 585 147 97 mses Oes O Flectric KGE 16 3/8 C Wolf Creek (47%) 1985 90 2,322 860 634 136 182 -as Island Lishaing** LIL 8 t/s D Shoscham (I00%) 1985 99 S,000 3,004 (Dec) 1.994 191 118 Nine Ende Poins * (IS%) 1986 82 4,400'. eine Public Service klAP* 24 7/8 NR Seebeook I (l.5%) 1986 72 3,953 49 32 153 500 (Nov) Seebrook 2 08.5%) 1990 22 3,913 Alle South Utilities) MSU 34 t/8 C Grand Golf 8 (Of%) 1984 99 2.400 5,233 2,835 les ll8 Ce==,8 (Mt 2 *"%) len 33 NA

y _h m v e bl.thsome 3 (32.2%) 19e6 70 0 3,000 New York Flectric o Gas NGP 17 t/2 C Nine kl.se l*cias 2 (le%) 1966 30 4,4rer 473 (Da) I,010 47 64 Niaere Einho.h Power Nhlk 33 3/3 C Nine hiele reine 2 (44%) 1996 to 4,4MP l.009 I,875 54 43 Northeass Us.hties NU $2 Q El,Ilu me 3 It 4.9%) 8996 70 + 3,080 1.583 (Dn) I,292 187 55 Scabscok i f 4.8%) 1996 72 3,983 Sesbe.en 2 ti.l's) 1990 22 3,913 Ohio Edison Orc 42 3/4 C Perry I (15.2%) 1985 91 2,498 I,992 (Dec) 8.667 119 95 revey 2 05.2*e) 1984 42 2.493* Dra.es Valley 2 (41.9%) 1996 75 3.568 Pacific Gas A Electric PCG 83 7/8 C Ibblo Canyce I (Borl%) 1984 99 2.230 3,637 (Oct) 4,785 16 64 lbllo Canjun 2 (100%) 1985 95 2.210 Pacific Power A Light PPW 22 1/2 A H rrM 3 (le".) Unceitain NA NA 292 (Dec)" l.253 23 30' Pennsyhente Power A Lish ppt. 21 3/5 B Suvluchenne 2 (90%) 8984 99 1,960 1,650 (Dec) I,734 95 lit I%iledelrbia Elecisie PE I4 I/2 D I.isnetick I (:en%) 19e5 93 3.060 3,054 2,432 325 88 I tawalrk 2 (840%) 1990 30 3,060 Portland GenereI I tectric PG74 14 C WrrM 3 (84*.I Uncertela NA NA 250 796 32 70' Public Service of Indiana ** PIN 9 t/4 D &last le listi I (51%) 16 3,892 8,434 332 99 Elseble 18:112 (83%) 35 Pet 4c Service of N. Ilesarshire PNil Il D Scabeek I (15.6%) 1986 72 3,983 1,330 (Dec) 749 178 125 Seatse k 2 05.6%) 8990 22 3,913 Elithsome 3 (l.9%) 1986 73 + 3,000 Public Service of New bee,1co PNhl 25 t/4 8 Pelo Verde I (10.2%) 1984 99 2.270 542 855 63 f2 Palo Verde 2 (10.2%) 1985 90 2.270 Pete Verde 3 (10.2%) 1996 81 2,270 Public Service Eintele A Gas PEG 21 R Ilore Creek I (95%) 1986 80 3,550 2.332 2,696 86 36 Poset Sound Po.es A Light PSD 13 t/4 D WrrSS 3 (5%) Uncertain

  • NA NA 116 669 17 105 Rochester Gas & Electric RCS IS I/4 C

Nine klile reine 2 (14%) 1986 to 4,400* 352 517 68 de Southern Califerale Edison SCE 36 3/4 A rela Verde I (15.8%) 1984 99 2,550t 835 3,692 23 63 Pelo Verde 2 (15.8%) 1985 90 2.550t Palo Verde 3 (15.8%) 1906 81 2.550t Soeshern Coenresyt SO IS B Vestic I (50.I*.) 8987 61 2,lmo 2,930 3,793 77 52' Vcatie 2 (30.1%) 1998 20 2,800 Temos Utiliales TXU 23 5/8 A Ceinanche Peak I (87.8%) 1985 97 1,640 2,449 3,170 77 34 Cesnanche reak 2 (s?.8%) 1987 65 I,640 Toledo EJhon TED 18 C Perry I (193) 1985 91 2,564 1,063 (Dec) 706 558 800 Perry 2 (19.9%) 1988 42 2,100* peever VoIIey 2 (19.9%) 3906 75 3,923 Umine Electric UEP 12 5/8 B Cellower (I00'4) 1985 90 + 2.418 2.220 1,453 353 805 United litenminosing UIL 22 I/8 D Seabrook I (11.5%) 1986 72 3,983 605 375 168 82 Seebreet 2 (37.5%) 1990 22 3,913 kl.Ilstone 3 0.7%) 3906 70 + 3,000 Washington Water Power WWF 19 3 WPPSS 3 (5%) Uncertale NA NA 126 451 28 67

  • NUCLEAR UNTTS IN BOLDFACE TYPE FACE SUBSTANTIAL RISK OF CANCELLATION. IN OUR OP8N80N.

1 1 A.G re 4s & S 3.c. h.s s d er e e d.e effedne er rerklee of shi. come.e, e.d/or one er u re of be e beid stre wishin she 8.as it se yeere. NM I r.s I. e.r 9y e rened limi. 2. .cende.

  • Eact.ac..-- - _" _, be
  • Tr.dre se ihr Abtf L

= st a re e e

  • me.a er e_. _ wme c.eu ie.

-. e c et n a a emeen wri in.e,me ene.e. se a.m . r-s, e e re, e 2,s is e.e e zi se e e m.

  • rm-
  • tme,is me mere a ee rac=a.

r - r=tr r A us s n= ie.e. sne as.e enm tr := me sm an.e = wn ss es 1 mee in en she=== is==66.ase ama ereks.n, ca s.o.a. e The ca y bene.e. hs. . Set s iMes ehrra.e I eesse.e c.e be were ered st.o h v.e a. e c p mw me,.-, s e e, se =m s ene n n-see, >=e.=.a arsai.e Arupc era sn e.4 messrs e of e m= e esem se see=== e.elaw.

r. nee so.si..e s.a no e 4 m. ee-ma n.m s.n a
n..

m.ia aom. j c 4 =,#.ai.e rm es + s.n e se one,=, r.s.e et sw. w,-i, t e.i e uenn.e a ses : et me.

=== m eases. s M4 M.e e a.tes Prices are se of the close of lie sierk*el on March S. IM4 Na Me(reded ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST

~ Keecmme-datl~s in determining whether to buy, scl!, or hold shares of electric ut!!! ties involved in nudear construction, investors should give special attention to their risk tolerance based on their objectives and temperament. As the discussion above indicates, / the risks of nuclear construction are substantially higher than many had recognized. Investors who bought the shares l of utilities building nuclear, thinking the fundamental risks facing the companies were modest, may now find that the ~ risk level is no longer appropriate for them. Accordingly, we recommend that investors review their electric utility holdings for nuclear construction involvement to determine if the issues still meet their risk tclerance and objectives. While the risks and prospects are different for each utility invohed in nudear construction, we think many of the stocks exhibit the investment characteristics of lower grade fixed income securities. Since current cash flow levels are weak at most of the companies, dividend growth prospects appear minimal at least until their nuclear units are included in the rate base. In some cases, unfavorable rate treatment could restrict dividend growth even after completion of nuclear units. To aid investors in the evaluation of their positions, this report indudes a table entitled " Electric Utilities Involved in Nudear Construction." The table contains information on individual projects as well as figures on the amount of dollars a company has invested in nudear construction in comparison to its common equity. The latter gives some feel for the magnitude of a company's nuclear construction exposure. In most cases, substantial dollars have been invested in nuclear construction relative to common equity, a weak situation in our view. Also included in the table is A. G. Edwards' rank-ing of the level of nuclear construction risk currently facing a company including an evaluation of common dividend s-curity. While we have tried to differentiate the levels of nuclear construction risk facing various companies, investors must keep in mind that measuring risk is an impossible task and any ranking must be considered crude. In addition, changing circumstances can suddenly alter the level of risk faced by a company. In using the risk ranking, careful atten-tion should be given to the explanation of the scale provided on page 3. In our opinion, conservative investors holding utility stocks for secure income and preservation of capital should consider selling most, if not all, common stock positions in utilities involved in nuclear construction. Only co,npanies whose dividends are considered secure and who face minimal nuclear construction risks should be considered for retention. In-vestors who are willing to accept some risk can continue to hold some positions in utilities which are not expected to fa:e major construction, financing, and rate treatment problems. Proper diversification is one of the best ways oflimiting risk. Investors should take special care that their portfolio is not concentrated in issues of companies involved in nuclear Ccnstruction. Wh!!e we thint: the' risks are too great for the typical utility investor, some carefully selected depressed shares may be ofinterest as aggressive or speculative buys. If such purchases are made, we advise that investors maintain adequate diver-sification. Only a modest part of a portfolio should be invested in such issues. Alternstlie Income Investments There are many alternative income investments available to those moving funds out of utilities involved in nuclear con-struction including the following: 1) Recommended non. nuclear electric utilities. Sugeested Buy Limit Kansas Power & Light (KAN 29 5/8) 32 Southern Indiana Gas & Electric (SIG 271/2) 32 Texas New Mexico Power (TNP.251/4) 28 2) Recommended electric utilities with nuclear capacity on line but none under construction. Surcested Buy Limit Consolidated Edison of New York (ED 23 3/4) 26 Boston Edison (BSE.27) 30 lowa Electric Light & Power (IEL 15 3/4) 17 Wisconsin Electric Power (WPC.25 3/4) 29 3) Corporate, government, or municipal bonds. Your A. G. Edwards inve:tment Broker can provide information on available issues. 4) Preferred stocks, particularly for corporate investors. Ycur A. G. Edwards Investment Broker can provide a copy of our latest " Selected Preferred Stocks" report. ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST 4 Douglas A. Fischer/pg March 6,1984 D.J.!. A.: !!65.20 DJ.U.A.: 128.81 S&P 400: 178.23 S&P 40 Utilities: 66.02

/ THE Pt.Aira OCALER Sur40AY. FEBmJARY 3.1985 Noneypinch p_ushes CEI The phas t Ey JAMES t.AWLESS In latervieirElocal and nati g a CEI essendally stopped construction utility analysts were not partica Lim e'" The Cleveland Electric illuminat-on Perry Unit 2. It even raised the concarned about CEI and the e .CAPCO utilities cuttin are staking their financial futures on .. specter of Unit 2 being canceled. No ~ '.ver Vaney. * * + -- g back at Ing Co. and its four utility partners decision has been made and none will the completion cf the $4.3 hillion Unit I -be inade until Unit 1 is completed, fObviously there is a cash sque One local CEI watcher s 1 ci the Perry nuclear power plant i. l I.CElsaid. -... s = 7;..c - The five utilities, called the Central i s. Cancellation became nearly ecm.

But CEI continues to make g Area Power Coordinating Group.

rmonplace early last year for other Pricesin the market." (CAPCO). Include CEl. Ohio Edison ' utilities try'.ng to build nuclear plants. .He said CErs stock price vs. Co, Toledo Edison Co. and two Penn ~ . CAPCO companies showed strain, dividend was very positive for la sylvanla utiliues. ....,,.,.o ; having spent more than $5 tillion on tors. ] ."1*Their' strategy is to hurry up. ~ They announced last week a one

  • i ' Perry and, Beaver Valley.,- - r.

.. ' year delay la completien of Unit 2 at i 1 'The' Ohio companies

  • Ero_blems get Perry'l done, lock in 1 and t.

5 Beaver Va!!ey, near Shippingport. \\. were complicated because the Public abandon 2 and take that hit for a c Pa which they are also building. and ! IUtilities Commission of Ohio denied 'ple of years " be said, reierring to j-reduced spending at Beaver Valley by Ohio Edison and Toledo Edison about i estimated $1 billion in costs tl $100 milhon thisyear. ,$107 millionin interest costs from this _.would have to be pald 11 Perry Uni , '. year of:" Perry or bust " because it is CAPCO might have a s!cgan this j construction. That decisie et Ohio wasabandoned. 4.b. .f'.1 e, Edison alone more than $90 million g',An,other local analyst felt Ohli i " critical that they bring this thing la l gannually from that rate hike request .M**. aw- ' on schedule this year." according to , C. Toledo Edison was hurt so seriously . Steve Zimmerman, a ratings officer .that it asked for an emergency rate ',,g,',,' tory climate has becom' e I ^ . hike. for Standard & Poor s Corp., the from the utility viewpoint this credit raungs firm. ?.r, n..;.4. l PUC0 refused to giveso called Con-because of PUCO's denial of won , Unit 1 of Perry uncluding conunon . ;struction Work la Progress funds progress funds. This is a horr Iacilities shared mith Unit 2)is sche-

.Unterest costs) because the comple-state for regulation and there is a t duled to be completed "arour>l the end I.tlon date of Perry Unit I kept chang-ons fear of brambles out in of 1985." la CErs inexact language.

Ing. CEI also has asked for CWIP future."one said. ne date is icit vague. It is very diffi- !,. money bu't PUC0 won't make that i cult to predict when nuclear plants decision for several weeks. Its staff ..The mismanagement char -. raised by consumer groups.cou!J. I willbe completed because they are so I recommended against CWIP costs for the utility;,. *..... l themdearly*"hesaid. i complex and so many things can go i i wrong before the plant o'perates. Concerns about mismanagem .. Othh problems involved the ability mh It is critical !cr the utilities that of the utilities to pay dividends. which Perry begm to operate as quickly as all th:ce promised to do a year ago. age t ud I constr "ts of Pe'#7~ DurinI the CEI r 'possible because they have bcrrowed. { Dave llodgden PUC0 supervisor of

h so much money to buildIL Perry Unit financial analysis, said published gGreater levelan Vel are I I 1 is estimated at 84.3 bil!!on. which in

! ; - reportslast fall indicated Ohio Edison perspective is more than eight times

and Toledo Edison could just cover

, hat iloada Motcr Co. spent to build their cash demands for dividends. w jts' plant atIL!aryssille..... a..: I indicating they had cash-flow prob-lems that could affect their ability to . finance other projects. _.....

\\ bdIT

g. FROM31RST PAGE

~ -. CEI's increasingly blurry financial picture - . parallels a drawneut construction: schedule. ' ' ~

  • Tr a ptAin osAt.ER SATURDAY, J' UNE 30, ISs4 and skyrocketing costs at the Perry plant. '.;,

e- ~ He #N fr G ud h in' u@ . +,.. partners appear to have started when Robert M. Ginn, CEI chairman, went to New York.' and gave an optimistic speech in late 1982 to , security analysts about _censtruction progress .e..,,... 5 ,y i f ~G'I'I 'k ' of the Perry plant.,,,,- - (',,.g,', k- . f..i Ginn's projections turned sour within i menths when CEI a'anounced Perry's costs. 4 ? ? g '.' 3 would rise from $4 blIBon to $5.2 billion, and o g l r. i.i completion of Unit I would extend from ,.. 'e ' ! e !Q r' spring of 1984 to spring of 1985.9 S , S.A number'of Etilities face be h~usgd ~ d' a! l {. - of ' bankruptcy,' including Public Service of ~ <= e j--.- .,..c '. 4..,,... 4 "y.'- New Hampshire, Public Service of inA=. -Consumers Power Colof Jackson,Mich and s All th tave plants tha 3 f',,.qgj. J .; caused them major nuru bi problems.':For fO p twe. ! example, Consumers has said it will fin 'out a ye .l'1 ' of money to operate by.Tuly 15 unless it gets. 1 U 1 ' relief from Michigan's utility commMfon. -{ 5 '.]celing Unit 2 and again,has delaye ' CEI has conceded the"pbssibuity of cani By Jr.mes 1,awless ' in a deteriorating financial market, Cleveland Electric D: h pletion date 'of Unit 1, now the end of 1985. luminating Co. is seeking a .4 Costs of the total project ~are now expected to ybe over $6 billion.,,% ;ga: financial safetymet of 3750 mil. ..T .. ;CEIis building Perry with Toledo Edison ,], i lion to 31 billion to complete the " $6 billion P,erry nuclear power, l Co... Ohio Edison-Co., Pennsylvania Power-q "; U ;*;" ,} Co., a subsidiary of Ohio Edison, idui Du-plant. CEI eIforts tolirovide a'finan- { quesne Power & Light Co.. 3 ". M h "When they (CEI) came in here and lied cial cushion against the so called ; nuclear paranoia on Wall Street -'to us in late '1982, that' soured me on the . were confirmed yesterday by 3 whole project," said a New York analyst who i Edgar H. Maugans,' CEI vice / asked not.to be identIEed. ;" Frankly they p es! dent..who :said.he had dis,, ican't be trusted, and I have ' ether things to d o." cussed the issue with three, bank M ers in the last,2) hours. m :;9 . Partleu!'arly damaging wa's an analysis Maugans said CEI was eon- . by Argus Research Corp. that said the cancel. cerned about the threat that other - lation of Unit 2 could sinh the Perry project. utilities, with nuclear construction - .The argument is that cancellation would-projects gone awry, might go ; cause Ohio Edison to be particularly dam-aged by having to write cif.,a.4320.million ) bankrupt. ~ ,, investment in Unit 2.. . The possibility of bankruptcy .l could cause a shutdown of finan-The report argued that such a writeoff cial markets," Maugans said. would prevent Edison from meeting its obli.

  • Should such a shutdown occur, gations in finishing Unit 1. '"(That) would we are talking to banks about a leave the other participants (utilities) holding b2ckup line of credit."

! the bag for all the remaining cost of that Maugans said the safety net unit," the report said. ( would be an option. "If the, banks "That is the general perception on the want too much money, we may street," said another New York analyst, who not do it," he said. "It's a man-also requested anonymity. Nbether Unit 2 is agement call." canceled or not, you have four companies Continued en Page 6.A ' building two other plants with a way to go. We feel they are already kind of extended. They can't make any mlW" A third analyst agreed that the Argus

~ .o 3 .N n .n. ~ ~ : .-~.w r.- /, ...,_...,..;..m......,n,.-it included $26 million in construction inter-perception of the Ferry project is commonly

  • t.

3'T , held amo::g 2nalysts. "The cancellation of est costs for Perry....."Those utilities ne

Ur.it 2 won't cause acy dividend cuts but will

' cause funding problems for Ohio Edison and. thEre isn't much confidence in 'them right " Toledo Edisori Co " he said."That could well 'now," the third analyst said. He said this l lead to another delay because the partners decision would compound the utilities

  • 1

,~,l..-.'s fj g. g { problems. lcannot raise d" ~ - '.. ,,y,, This analyst was particularly critical of . He said the anxiety could be resolved if ' a decision by the Public Utilities Commission CEI were able to estabush the credit lind of .Iof Ohio. In late' May, PUCO rejected a $40 $750 million to 41 billion' "That would make million agree' ment to settle Ohio Edison,s4 as feel a lot more secure" be said. "As,it is, , P.r.ep.osed.8130 million rate hike~~.W.P L '," 'That was a very stupid decision because ; ye now recomm I Of the analysts conta..... only Do the verylikely higher cost of capital willwipe out any savings to the co d Edison. .said. PUCO threw out the agreement b, ecause 'reco: amending CEI,0hio and Tole o .. ;::..:=..-..; w.a > 2: c ' ~.....,.. e 1 m v

  • me 0

l l .^ 4 ,._r,-._.- _ w,,, ..,.__.m.._ _~_..,,-_m_.,,.,....,--,_.-.-,_.--,-w___-,v-me--r---

3-

  • m P,

gn y am q smo .o < i f \\f j q f 4 t .'.f. ..w w .w

y..c,

.wn, +.. - - w. r ..m d ".q aL.1 k.J.b.1, i y a 3 i 4 Vef i . w nc m cr4.qn: n u :x - i ~

  • '.;" v:=s *

%. " i h*.. '"'

  • "h! p '. b.""G

,p

y a c.-
  • NE PLAIN DEALER. WEDNESDAY, MARCH 6.1985=

. m g - J. M m .ma g - p,gg g g g g,; .c .w :.u:5 TT.'i U N .c By DONALD SABATH.,, 7 main work has ended at Unit 1 at 4 3-D and JAMES LAWLESS..~l. Perry.",,,6, ~6.s..g..,'m c.q, i He said the' changed wage rates sIAn mums, =,_,, =.,,-. a c'rc Leaders of 13 unions representing resulted from the CD project being. workers at the 86.3 billion Perry nearly completed and work being con-nuclear power plant met yesterday sidered maintenance and not con-with Cleveland Dectric Illuminating structiong.gsb::.:3g :7 Co. officials in an attempt to iron out * -Frank Hayes, CEI's spokesman at revised, wage and contract differ-.Perry, said that at the construction X M i6 IT g encesg.5;. .r? My

  • T peak, Perry had.d,500 workers, but c

, ne meeting was called because the there now are about 5,000, which will majority of the unions at the Perry decline further,,to,,2,500 by_the end of plant have converted their work 1985.,,.,,3 3 3 p n g, s,c agreements from a construction-type .,. Sue Elatt, a spokesman-for Ohio' ~ ntract to maintenance _ contracts ' d: Citizens ior. Responsible Energy co .e . m t " -c et ,; The maintenance 1:entracts went ' construction workers were upset became CD allegedly was abg Que into effect Monday and will resn!t in 2 wage concessions as a threat, with .feren[;Mg,p. to r"0f f.mumg and, shift, dif-workers 30**f t-Some' construction w'orkei's at ' llems with the wage package, Pe ~ Unit 2 idll be cancelled or would be i i

. Jef a potentialweekly pay,Pla'in Dealer *, built by non un Perryco:pplained to ne loss ranging future.' y y, $ g. S F 4

,. from $100 to 3200..One laborer, who .;CD would never 2ruten ou Eob asked not to be identified, said his structiom workers'and wben Unit t of hourly wagesj,b,e cut,,f o,m,$_182. Perry is built,it will be built by union I -to$1j.80. ..g.. . workers." Haves said, in denytag the. one is upsrs hard to belim th , Jotiph R. La Rocca, ' head of the-charge."It et over provis!cas,of,our Naticnal Maintena'nce Agreements Policy Committee Inc., of Arlington, laborconjracts."13,Q,,*,7 g,y Va., chaired the meeting. The group 7 Hayes said tle 13 construction was set up by construction unions.to unions at Perry are werking with resolve problems arising from going standard.intemational construction I from a construction contract to a agreements and CD has had "ezeel-maintenance contract. % Ni't lent cooperation with the unions, all .. ' Under the construction phase of the adding up to a hig"h quality work b. l force." c' contract with the unions, overtime -CD su[1'plais'to 'b'av'e P' Uniti' ,- had been paid at double time. Now. - generating power by~the of this the rate for overtime work for con- .. struction workers will be time and a E'*#'said Haye.s. A v .ta half. Some shi!t pay dif ferentials were also redu.ced, workers complained. Thomas Welo, secretarf of the Car-l penters District Council here, said work by his members at the Perry ' plant had eased to a point where it is now censidered maintenance, not con-i l 'struction. There are 150 carpenters at the site. "Under our international centract, any large job in a new plant, factory or nuclear facility, the maintenance contract Brovides for a lower scale,}}

Retrieved from "https://kanterella.com/w/index.php?title=ML20115A568&oldid=4289540"