The MacNeil/Lehrer Report; Three Mile Island Clean-up

[Tease]

ROBERT MacNEIL [voice-over]: Three years after the nation's worst nuclear accident, the clean-up drags on because they can't agree who should pay.

[Titles]

MacNEIL: Good evening. A congressional hearing was told today that the nuclear power industry would quickly recover if the site of the Three Mile Island nuclear accident was cleaned up. This prediction was made as the House Subcommittee on Energy and the Environment continued hearings into the problems of cleaning up the damage from the nation's worst nuclear accident. In the three years since the accident the nuclear power industry has been at a virtual standstill. No new plants have been ordered, and more than 30 orders have been canceled. Wall Street analysts testifying today said that would change and investor confidence would return when the damaged reactor was cleaned up. But efforts to do so are stalled in a dispute over who should pay, in particular whether consumers across the nation and taxpayers should foot some of the bill. The answer could have far-reaching consequences for the future of nuclear power in the United States and the pocketbooks of electricity consumers. Tonight, who pays for Three Mile Island? Jim Lehrer is off; Charlayne Hunter-Gault is in Washington. Charlayne?

CHARLAYNE HUNTER-GAULT: Robin, the cost of what has been called an historic clean-up is so high because of the extremely sensitive and potentially dangerous nature of the accident. You may recall it all happened when a stuck valve at one of two reactors at the site outside Harrisburg caused a loss of water used to cool the nuclear core of the reactor. That then caused the core to overheat and partially melt. Following the accident, hydrogen gas built up creating fears of a massive explosion and release of radioactive material into the atmosphere.The utility operators and nuclear regulatory commissioners who rushed to the site were able to contain the damage within the reactor building. The damage within the reactor was severe, but the full extent of the damage cannot be determined until all of the water is removed and workers can gain access to the reactor core. The estimated cost of all that is $1 billion. Robin?

MacNEIL: Three utilities in Pennsylvania and New Jersey own Three Mile Island, and their common stock is owned by a holding company, General Public Utilities Corporation. William Kuhns has been chairman and chief executive officer of GPU since 1974. Mr. Kuhns, how far has the clean-up progressed?

WILLIAM KUHNS: Well, it's moving along very slowly; too slowly. We have vented the krypton gas; we have virtually finished the processing of the contaminated water in the containment building itself. We will now move in on some water in the primary system. We've used an underwater, submerged demineralizer system to accomplish that. The next big task is to get at that core, and we are still hopeful that we can accomplish that in 1985. That's going to be a major step to get that and get that removed and off the island with the help of the Department of Energy, which recently indicated their support for that activity.

MacNEIL: They've said that they would take charge off the core and get it out of your way?

Mr. KUHNS: Yes, they have.

MacNEIL: If you could do it as rapidly as you wanted to do it, how quickly could it be done?

Mr. KUHNS: Well, we should be spending at the level of about $120 to $130 million a year -- roughly twice; we're now at about $60 million a year. And at that rate it would take about five to six years to complete --

MacNEIL: From here?

Mr. KUHNS: Yes.

MacNEIL: And so you're going more slowly because you can't spend at the rate you want to spend?

Mr. KUHNS: That's right. We have nothing really today other than the insurance. We've spent about -- that was $300 million, the most anybody could have, at the time of the accident. We have spent about $210 of that, and we have to husband that insurance, we believe, to take care of an emergency that might develop. So we're going much slower than we should be going to really accomplish that very important task of getting on which this clean-up.

MacNEIL: Let's go back over some of the details for a moment. What are you doing with the thousands or hundreds of thousands of gallons of water that you've had to take out of there -- radioactive water?

Mr. KUHNS: That's being stored on the island in tanks that were built for that purpose, and it's pure water at this point, but we are not proposing to dispose of it in any way, but rather to store it on the island.

MacNEIL: It has lost its radioactivity?

Mr. KUHNS: Yes, it has. Yes, it has.

MacNEIL: But it contains substances still which you wouldn't want to distribute into the water system?

Mr. KUHNS: Well, not really. I'm told that it contains some tritium, not at levels that are dangerous, but we early on felt that it was not worth disturbing the comfort, the peace of mind of the population to take on that particular task at this time. So we will store it, and have no present intention of discharging it.

MacNEIL: How are you going about decontaminating the inside of the buildings that house that water?

Mr. KUHNS: Well, that's a matter of going in with people suited up in protective clothing -- it's a very unproductive, inefficient activity, which accounts for much of the cost -- and literally scrubbing it down with detergents and mops and sprays. We've been doing some decontamination testing recently, and have succeeded in reducing levels of contamination to a good extent. But it's a tough job of scrubbing and rinsing and cleansing the water, and scrubbing and rinsing. It's a slow process. The tough part, the interesting part, the part that really will render or deliver a lot of learning is the removal of the core and the analysis of that core, which is a terribly important feature, everyone believes, to the future of nuclear power. No other core has ever suffered the abnormal -- off-normal conditions of that core. There's a lot to be learned from examining that.

MacNEIL: Now, why can't General Public Utilities pay for this clean-up itself?

Mr. KUHNS: We simply don't have the money. The stockholder has -- we've eliminated the stockholder dividend. There's nothing there. The stockholder has lost about $300 million in dividends; he has seen his stock price go from about $17 to $18 a share at the time of the accident to about $5, so there's another $700-plus million of loss that he has suffered. We have no access to capital markets. Our only source of external funds is under the revolving credit agreement with 45 banks. That agreement has been renegotiated; it expires the end of this year, 1982, and we must be able to demonstrate some progress on both the clean-up and, I believe, the restart of Unit 1 in order to expect them to be with us beyond that point. We're in very desperate shape, and continue to be.

MacNEIL: Well, thank you.Charlayne?

HUNTER-GAULT: The problem of how to pay for the Three Mile Island clean-up has been a controversial one, and has resulted in a number of different proposals. One of those was put forward by Pennsylvania Governor Dick Thornburgh. The plan was developed with the Edison Electric Institute, an association of private utilities, and is incorporated in a Senate bill proposed by John Heinz, Republican of Pennsylvania, and Bill Bradley, Democrat of New Jersey. Governor Thornburgh is with us in the studios of public television station WITF in Hershey, Pennsylvania. Governor Thornburgh, could you just tell us briefly what are the key elements of your proposal?

Gov. DICK THORNBURGH: Charlayne, for us the crisis at Three Mile Island did not end in March of 1979; it continues to this day because of the concern that we have over the health and safety threats and the threats to our environment in having an unintended, highly contaminated, radioactive waste dump close to a center of population. It's been on our minds on a daily basis. When it became evident close to a year ago that there was to be no consensus upon how to fund the clean-up -- the $760 million in unmet expenses that were bearing in on the clean-up process -- I suggested a comprehensive cost-sharing plan that would call for the lion's share of the cost still to be picked up by the Commonwealth of Pennsylvania in the form of ratepayers and the utility's contribution, but also calling upon the federal government and the utility industry nationwide to pick up its share. It was the federal government, after all, that promoted, financed and regulated the nuclear industry throughout its entire existence, and it is quite clear that the cost to the utility industry nationwide, because of the dilemma of the unresolved clean-up costs at Three Mile Island, was exacting a charge on every customer and every investor throughout the nation. We have --

HUNTER-GAULT: But there is a wide perception, at least in some of the states, that it's not fair to ask the utilities in other states to pay for this when it affects only Pennsylvania and New Jersey.

Gov. THORNBURGH: Well, I would hope that recognition would be forthcoming, as it has been from so many sources, that this is a national problem. It was only accident of geography and human error that visited this unprecedented nuclear accident on Pennsylvania. It could have happened anywhere, and no city really is far from Three Mile Island when you consider the fact that we have some 70 nuclear facilities operating throughout the United States. The cost, when it's spread and shared across the nation, is minimal, and recognizes the fact that no single institution can possibly pick up the enormous cost involved in dealing with this unrecedented accident.

HUNTER-GAULT: The federal government approved $123 million for this, but the President's counselor, Ed Meese, said that the financial burdens created by Three Mile Island were really the responsibility of those who primarily used and produced the electrical power for the facility. What's your response to that?

Gov. THORNBURGH: Well, we were greatly heartened with the commitment of the Reagan administration, even at a time of extreme financial stringency, of $123 million to aid as part of the cost-sharing proposal that I suggested. The fact of the matter is that the major portion of the share of the cost of the clean-up will be paid by Pennsylvania ratepayers, by Pennsylvania utilities, and by the Pennsylvania legislature's approval of the appropriation that I suggested, of some $30 million, even though we have no jurisdiction and no authority to affect the operation of the reactor. That's our token of good faith, our sign that we recognize that there is a Pennsylvania problem. But it is not simply just a Pennsylvania problem; it's problem for the industry; it's a problem for the nation, and one that we feel equitably the costs of which must be shared across the nation.

HUNTER-GAULT: You asked the feds initially for $100 million [sic] in your plan. Will you be going back for more inasmuch as they've only offered $123 million?

Gov. THORNBURGH: What we're most interested in is establishing the principle of cost sharing, a recognition that we all in this nation havea stake in resolving what is now a dilemma of enormous consequences with regard to health and safety and environmental integrity. If that principle of cost sharing is accepted, I think that the discussions about what the particular costs will be in terms of dollars can go forward productively. There is room for debate; we didn't regard our figures as being set in stone. But we are heartened by the fact that the utility industry, the Reagan administration, the citizens of Pennsylvania have recognized their responsibilities, and we would hope for early congressional action to set this in some solid form so that we can get ahead with the clean-up. That's what bothers those of us who have had to live with this dilemma for three years -- the fact that the clean-up may well be stalled on dead center if the financing is not forthcoming.

HUNTER-GAULT: Thank you, Governor. Robin?

MacNEIL: There is strong opposition in some quarters to the notion that this is a national problem. One person who does not think so is Larry Hobart, deputy executive director of the American Public Power Association, which represents more than 1,750 public power systems, mainly municipally owned. Mr. Hobart, why is this not a national problem?

LARRY HOBART: The solution to the financing problem for the clean-up, Mr. MacNeil, lies largely now in the hands of the people of Pennsylvania and New Jersey. It's interesting to note that while the accident at Three Mile Island occurred over three years ago, that the consumers in Pennsylvania have yet to contribute one cent to the actual clean-up of the project. We think that this is a regional problem. We can understand the political response of the people that are trying to deal with it, but we do not consider it to be unique. Utilities all over the country are paying the price for plants which have gone off-line or the costs that are sunk in investments which have not materialized because of falling load growth. And to suggest that those consumers should pay money to GPU to help it with its problem in Pennsylvania doesn't seem to us equitable. Furthermore, the principle that Governor Thornburgh lays out of cost sharing strikes us as being an anathema in terms of trying to fix accountability for costs of accidents and incidents of this kind. After all, it wasn't an act of God that caused the difficulty at Three Mile Island; it was a mechanical malfunction which was compounded by human mistakes, and that can happen anyplace.

MacNEIL: As I understand your position, is there a kind of antinuclear bias in your position? I mean, do most of the utilities your association represents generate their power from other forms of energy than nuclear power?

Mr. HOBART: No, on the contrary, Mr. MacNeil. We have a number of members that are actively engaged in the operation or construction of nuclear power plants, and many of our members hold small fractional shares of plants which are owned and operated by private companies.

MacNEIL: So you're not speaking as an opponent of nuclear power generation?

Mr. HOBART: Definitely not. And I am not speaking as an opponent of the clean-up at Three Mile Island, because that is a national necessity. It is our belief that the opportunity to take care of that problem exists.

MacNEIL: Can I ask you this: you heard from Mr. Kuhns; how could GPU pay for it in the financial situation that he has just described?

Mr. HOBART: GPU is fairly up against the gun in terms of borrowing, and it's got a problem in raising money in equity because of its lack of dividend payments overthe past few years. The place where there is an opportunity to find cash for the clean-up is clearly through the state commissions in Pennsylvania and in New Jersey, who have the power to provide that answer. Actually --

MacNEIL: In other words, you're saying New Jersey and Pennsylvania consumers of their electricity should pay more?

Mr. HOBART: Mr. Kuhns himself has said on several occasions that the cost of a rate increase to cover the clean-up is not great, and in fact the average 10% figure applying to his three subsidiaries would still allow the consumers of GPU to maintain rates which are competitive with those in the same area.

MacNEIL: Who gets hurt under the cost-sharing scheme?

Mr. HOBART: The public gets hurt in two ways. First, consumers who have no causal connection with the incident at Three Mile Island are caused to pay through their pocketbook to financially assist GPU; secondly, precedent is created which suggests that when financial difficulties hit an electric utility, particularly in the nuclear area, that the answer is a community bailout as opposed to individual responsibility to provide the necessary funds and technical assistance to take care of the problem.

MacNEIL: Thank you. Charlayne?

HUNTER-GAULT: Earlier this year a utility in New Mexico attempted to raise its rates to help create a Three Mile Island fund. The attorney general of New Mexico went to the public service commission and blocked the request. He is Jeff Bingaman, and he is here with us to give us more on that. Mr. Attorney General, why did you block the rate increase by the utility?

Mr. JEFF BINGAMAN: Well, Charlayne, it's our position that the consumers and the ratepayers in Pennsylvania and New Jersey have not had their rates increased by their public service commission to pay for this, and I see very little justification for raising the rates of people in New Mexico, particularly considering the fact that New Mexico ratepayers are already paying a higher price per kilowatt-hour than are the ratepayers in Pennsylvania and New Jersey.

HUNTER-GAULT: Well, you heard what Governor Thornburgh said, that this is really a national problem, that it could have happened anywhere, and that everybody should share in this because it could happen anywhere.

Mr. BINGAMAN: Well, the problems I have with that are about -- I have two main problems with it. First of all, I think that you have to maintain some degree of accountability in our system. If we're going to have a free-enterprise system of sorts you can't just have the general public picking up the risk when things go wrong. The people who have benefitted from the nuclear power produced at Three Mile Island have had lower rates than many parts of the country because they have been using nuclear power. And now when an accident occurs, that's one of the costs of doing business, and I feel it has to be borne primarily by the company and by the people who built the reactors. I don't see any justification for saying that when things are going good the Pennsylvania ratepayer gets the benefit, and when they go bad the New Mexico ratepayer picks up the difference.

HUNTER-GAULT: Well, the mayor of one town in Pennsylvania said that everybody who was involved in the nuclear electricity business has profited and learned from this. In fact, he's calling it Three Mile Island Institute, he said, but nobody wants to pay the tuition. I mean, doesn't he have a point there, in your view?

Mr. BINGAMAN: Well, I think he clearly has a point, and I think that some kind of cost sharing is appropriate, but I feel like the place where the costs should be concentrated is in the company itself, in the people who built the reactor, perhaps some of the creditors of the company, and in the ratepayers who actually benefitted for years from the production of that nuclear power. I don't see any justification for increasing people's taxes or adding it to electric bills in New Mexico. That to me is a fairly remote connection, and I just don't see how you can maintain accountability in our system if you spread it that wide.

HUNTER-GAULT: What about the federal government's role in this? How do you see that?

Mr. BINGAMAN: I see it as a mistake because I think it fouls up or distorts our decision making on different forms of energy. If we're going to use our tax money to pay for accidents in the nuclear field, why don't we use our tax money to pay for problems in the solar energy field and various other fields? I don't see that it's appropriate to use a couple hundred million dollars of tax money, which I guess is about what's been requested, to go in and solve this problem in the nuclear field, when in fact, as I say, the more responsible elements have not had to, in my opinion, had to ante up as yet.

HUNTER-GAULT: All right. Thank you. Robin?

MacNEIL: Mr. Kuhns, on Mr. Hobart's point, first. Why couldn't you raise the rates to your consumers to pay for this?

Mr. KUHNS: Well, presumably we could, but there's a limit. I think the quote is accurate in terms of the point of time we were talking about in September of '81 that Mr. Hobart quoted. Since that time we've had a 30% increase in Met Ed. Let me just go over this quickly. Jersey Central's rates have gone up over 71% since the accident. We have an application before the commission now that, if it's approved, their rates would have more than doubled since the accident. Met Ed is 88%. These are --

MacNEIL: These are some of the three constituent companies?

Mr. KUHNS: Yes, sir. These are heavy increments, and I think it's a little unfair to just keep adding on and identifying each increment as, "Well, that isn't going to hurt that much." I think I'd like to cut through some of this. I think it's pretty well established that our accident was not the fault of one company. I think that's clearly established and I could tick off all kinds -- all one has to do is look at what has happened to this nuclear industry. Regulation-designed construction, operator training, instrumentation, everything since the accident. The NRC's final report on lessons learned as a result of that accident came up with an action plan of over 200 items affecting not just Three Mile Island, but every nuclear power plant in this country. So I think there is an involvement in the whole industry. I would ask these men respectfully to review, and I gather they haven't, and I understand that; they don't have time, perhaps. But two of the witnesses in the hearings today that you described were financial investment bankers, and they identified very clearly, as others have in prior hearings, that the customers of these companies and all companies -- all nuclear utilities around this country -- are today paying more for their electric service because of the discount, or the risk premium that investors are assessing against the securities of nuclear power companies than would be their cost if they participated in this very equitable sharing program that Governor Thornburgh has proposed.

MacNEIL: Let's ask Mr. Hobart about that. Mr. Hobart?

Mr. HOBART: That's an interesting point. I have two responses to it. One is that we heard very much the same kind of talk in 1974 when Con Ed slipped a dividend and Business Week reported that a pall of doubt had been cast on all utility financing throughout the country. Three years later Con Ed came back with what was described as a spectacular financial rebound, and paid a record dividend. In the interval it had solved its problem by selling two of its power plants to the State of New York. Secondly, it appears that the financial institutions in New York may speak with one language in Washington and another language on Wall Street. I notice recently that Merrill Lynch is very bullish on nuclear power. They say nuclear utilities, in fact, generally have improved their standing on Wall Street since the Three Mile Island accident, and they look very favorably on companies that are constructing or operating nuclear power plants.

MacNEIL: Governor Thornburgh, Mr. Bingaman, Attorney General Bingaman's point that you must have accountability, you can't have the public -- or, he says, you can't have the public picking up the risk when things go wrong in things like nuclear power.

Gov. THORNBURGH: I think what we're asking is that the federal government be held accountable for the whole nuclear industry. It was, after all, under the Atomic Energy Act of 1954 that the industry itself was largely financed by the federal government, promoted by the federal government, utilized in some 70 locations around the county, and it doesn't quite seem equitable to us that when the first accident happens that everyone seems to want to disown their parentage of an industry that is, I think by common consent, unique. We're very anxious in central Pennsylvania. We're worried that this battle back and forth does not seem to produce the results that are necessary to put to rest the fears that the people of this area have about their health and safety and about the integrity of their environment. The cost-sharing plan was proposed by me as an equitable basis for drawing upon all those persons who have a responsibility for and an interest in the survival of our utility industries. So I think that the general agreement that's been given even this evening as to the equitable nature of a cost-sharing plan keeps us hopeful.

MacNEIL: Mr. Bingaman?

Mr. BINGAMAN: Well, as I say, I think a cost-sharing plan is appropriate; I just don't agree as to -- that the ratepayers in New Mexico should share in the cost. I think that the --

MacNEIL: Specifically, Mr. Bingaman, specifically who do you think should pay more who is not paying now?

Mr. BINGAMAN: Well, I think the companies -- as I understand, Governor Thornburgh's original proposal was that some of the companies involved in the construction of the nuclear power plant should share in some of the cost, and in fact that was not made part of the bill -- the Heinz bill -- that's now being considered in the Congress. I think it's perfectly appropriate that you have a portion of that cost picked up by the companies that constructed the facility that had the defect.

MacNEIL: What about that, Mr. Kuhns?

Mr. KUHNS: Well, I think that's a point to be pursued at an appropriate time. I don't think it's the starting point. I think we have to get this train moving before we do that. I think it's likely to be a smaller piece than the pieces that the Governor has identified.

MacNEIL: So that I understand this clearly, how much money is outstanding after the federal government has promised its $123 million. What lump is outstanding, and where does this cost-sharing plan envisage it coming from?

Mr. KUHNS: Well, the Governor split the $760 million of uninsured costs between local and national -- $380 for each. He then took the $380 national piece and split that in half -- $190 for the utility industry, and $190 for the federal government. So that is where that half is to come from. The other $380 is split between the remaining insurance of about $90; the customer, the company, $245; and the states of Pennsylvania and New Jersey aggregating some $45 million. And that makes up this --

MacNEIL: So, apart from the federal government not having made up its $190 -- it has only offered $123 so far -- the big lump that's outstanding is in the rest of the utility industry across the country. Is that correct?

Mr. KUHNS: Yes, that is a big piece, and I think it's interesting to note that in terms of the level of cost, and again, this is something that these gentlemen probably haven't had a chance to review, and it's probably our fault for not making it clearer to them. Take Public Service of New Mexico. The average residential customer sharing in this plan would have an annual cost -- an annual cost: an average customer using 500 kilowatt-hours a month -- of 12 cents per year. Per year. We're talking, as the Governor indicated, when we spread this over these people over a period of time, it's not that great.

MacNEIL: Mr. Bingaman, what's your reply to that?

Mr. BINGAMAN: Well, I don't think the magnitude of the cost is the issue here. I think the question is, every time we have a problem in our nuclear facility in any of the 70 or so nuclear power plants around the country, are we going to just absorb that and pass it on to people's electric bills throughout the country, or are, in fact, we going to maintain some accountability in the system and try to have the true cost of nuclear power reflected in the electric bills of utilities that produce their electricity with nuclear power?

MacNEIL: Finally, Mr. Hobart, we have just a few seconds left. Could I ask you, if the rest of the utility industry around the country does not contribute to this and the problem is not solved, what happens to the future development of nuclear power?

Mr. HOBART: I don't accept the premise that the problem will not be solved. It will be solved. There is a financial way to do it; it just is not acceptable to some of the people who are arguing the case. Secondly, nuclear power has a future, and its financial stability is touted daily among its supporters, not only among utilities, but in the financial world. I think we will see nuclear power continue to be a viable option.

MacNEIL: Yeah. I'd like to thank Governor Thornburgh in Hershey, Pennsylvania, for joining us. Thank you, Governor. In Washington, Mr. Hobart and Mr. Bingaman; in New York, Mr. Kuhns, thank you. Good night, Charlayne.

HUNTER-GAULT: Good night, Robin.

MacNEIL: That's all for tonight. We will be back tomorrow night.I'm Robert MacNeil. Good night.