Lights out
for Shoreham


When the Nuclear Regulatory Commission (NRC) finally authorized the commercial operation of the Shoreham Nuclear Power Station in April 1989, it seemed a perverse consolation prize. The Long Island Lighting Company (LILCO), which serves the territory just east of New York City, had pursued the construction and licensing of Shoreham for the better part of a quarter century, gambling ever-increasing shares of its credibility and capital on what was to become the nation's costliest nuclear power plant.

Yet by the time the NRC gave the final go-ahead just over three years ago, even LILCO had abandoned any hope of operating the plant. Two months earlier, on the verge of bankruptcy, LILCO had cut a deal with New York Gov. Mario Cuomo, pledging to give up Shoreham and turn it over to the state for decommissioning in return for a badly needed financial bailout.

With that, the bitter saga of the Shoreham nuclear power plant seemed at an end, although the Bush administration and others would attempt, unsuccessfully, to scuttle the deal. (See "A Last-Ditch Rescue Effort," page 43.) For three more years, LILCO would be forced to keep the plant in a state of suspended animation at a cost of more than $400,000 a day, while federal regulators considered how to handle the utility's decision to throw in the towel. But the outcome would not change.

The coup de grace came February 26, 1992, when the NRC authorized state officials to rid the plant of the radioactivity produced by low-power testing, making Shoreham the nation's first large-scale commercial nuclear power plant to be decommissioned.

Now little more than a relic of failed ambition, Shoreham's power as a symbol seems likely to endure. As Three Mile Island and Chernobyl came to symbolize the potential for catastrophic nuclear accidents, so Shoreham seems destined to stand as a monument to the structural deficiencies of an entire industry-failings that have prompted U.S. utilities to cancel plans for more than 100 new plants and to write off more than $30 billion. Many plants suffered setbacks. Some were colossal failures. But nowhere did the problems that afflicted the industry come together with such consistent and devastating consequences as they did at Shoreham.

Although Shoreham's original cost was projected at $65 million, LILCO ended up spending $5.5 billion on the plant before it was licensed in 1989. And another $1 billion will have been expended by the time it is decommissioned. Along the way, Shoreham fell victim to nearly every affliction that has haunted the U.S. nuclear power industry, from faulty estimates of construction costs and future energy demand, to safety violations, labor abuses, protests, changing regulatory requirements-and sometimes just plain bad luck. As NRC Commissioner John Ahearne characterized it more than a decade ago, Shoreham was a "horror story" (Newsday, November 15, 1981).


Boom time

When plans for construction of a nuclear power plant were presented to LILCO's board of directors in 1965, orders for reactors were beginning to pile up. In December 1963 General Electric offered to build a 650-megawatt boiling-water reactor at Oyster Creek, New Jersey, for Jersey Central Power & Light at a fixed cost of $65 million. GE and Westinghouse, which was promoting a pressurized-water reactor, signed a total of 12 so-called turn-key contracts with other utilities before discontinuing the practice in 1966. Although losses on turn-key contracts eventually totaled more than $1 billion, the early guarantees had a bandwagon effect that led utilities to order more than 80 plants by 1969.

LILCO was eager to join the rush. Despite warnings from some economists and a lack of hard financial data, it was one of the first utilities to order a nuclear power plant after the price guarantees were dropped. It was also the first utility in the nation to order GE's Mark II containment structure, an untested design that eventually had to be partially re-engineered and rebuilt at a cost of $100 million.


The backlash

Almost immediately, LILCO ran into problems. In October 1967, while plans for Shoreham were still being worked out, the utility announced its intention to build a second reactor at Lloyd Neck, an exclusive enclave on Long Island's north shore, where not so much as a gas station was permitted within village limits. Predictably, the announcement aroused the concerns of the local community. One wealthy landowner was so incensed at the utility's plan to purchase his property that he donated his estate to the U.S. government as a wildlife preserve. More significantly, the announcement prompted the formation of the Lloyd Harbor Study Group-which almost immediately turned its attention to Shoreham, 30 miles to the east, figuring that the best way to head off the Lloyd Neck plant was to block any development of nuclear power on Long Island.

LILCO, meanwhile, unwittingly gave the protesters time to organize and build their case. In late 1968, with growth on Long Island fueling a one-year 20 percent increase in electricity demand, the utility put the brakes on its construction permit application for Shoreham. Original plans called for a 540-megawatt unit. Rather than order a second, twin unit, LILCO decided to increase the reactor size to 820 megawatts and rewrite the application. Not only did the delay give opponents time to marshal their forces, it meant that Shoreham would be among the first reactors in the country subject to the lengthy reviews mandated by the National Environmental Policy Act of 1970.

Although it was born of parochial concerns, the Lloyd Harbor group drew expertise and support from an emerging environmental movement and a small core of scientists who had begun to question the wisdom of commercial nuclear power. Irving Like, the group's attorney, understood that by the time the hearings opened on September 21, 1970, LILCO and the Atomic Energy Commission (NRC's predecessor) would have already agreed on the general terms of the license. His strategy was to dismiss the proceedings as a "kangaroo court" whose rules, he said at the time, were weighted toward the utility and toward the AEC itself. "They choose the arguments they will hear," he said, "and block the ones they won't. It's sort of [a] nuclear Catch-22 in which you have to play by their rules and their rules won't let you win." Like played by the rules, but resolved to turn the hearing into a "multi-media confrontation" that he hoped would "force a change in the system through political means" (Newsday, February 16, 1971).

The result was a landmark hearing-the longest in AEC history, spanning 70 sessions over three years-that for the first time focused a national spotlight on efforts to oppose the development of nuclear power. There were the predictable appeals to emotion-a civic leader, for example, read a Mother's Day letter to his granddaughter about the dangers of atomic power. But the hearing also touched on issues that would eventually become central to the debate over nuclear power: the plant's environmental impact; the effects of radiation; the potential for catastrophic accidents; and the need for evacuation procedures. By the time LILCO was finally awarded its construction license on April 12, 1973, the Maine Yankee nuclear power plant in Wiscasset-ordered the same year LILCO placed its order for Shoreham-was already generating power.


Construction nightmare

Since LILCO had no experience in nuclear construction, the utility hired Stone & Webster Engineering of Boston to design, engineer, and construct the plant around GE's boiling-water reactor. The company was awarded an open-ended cost-plus contract, providing little incentive to hold down the cost of construction. And until 1977, when LILCO finally took over construction management itself, the utility provided little external control.

Management problems, later documented by NRC records and investigative reports by Long Island's Newsday, were compounded by a lack of organization at the site, as well as by design flaws and construction errors that required entire sections of the plant to be rebuilt-and sometimes rebuilt again. There was confusion over who was in charge, there were delays in the delivery of essential materials, and extensive union featherbedding resulted in inordinately large construction crews.

By May 1974, a year after construction began, the projected cost had increased to $695 million. By the end of 1976 it was approaching $1 billion. By mid-1980 it had jumped to $2.2 billion.

During this period, Shoreham, like other unfinished nuclear power plants, was subject to a steady stream of regulatory changes that were imposed retroactively on any plant still under construction.

The costliest change-one of hundreds ordered over the 11-year course of the project- came in 1975 when the NRC brought to light potentially serious problems with the Mark II containment-the outer shell that represents a plant's last line of defense during a serious loss-of-coolant accident. Shoreham's containment was essentially complete when the NRC demanded that it be strengthened. The cost to LILCO was more than $100 million.

A state audit completed in 1984 concluded that the utility's failure to properly schedule and monitor work on the site and keep up with fast-changing federal regulations had resulted in crippling delays. Over 10 million man-hours, a third of the time invested in the project, had been wasted. Overtime was excessive. The construction site was overcrowded and unproductive, the result of failing to anticipate con- struction needs and regulatory changes. Engineering drawings sometimes lagged behind construction, causing equipment to be installed in the wrong place. Theft and on-the-job drinking were prevalent. The NRC, meanwhile, repeatedly cited the utility for violating regulations designed to insure that the plant met safety standards.


Three Mile Island

Opposition to Shoreham was still lively throughout the 1970s, but much of the organized anti-nuclear activity on Long Island shifted to Jamesport, on the island's distant north fork, where LILCO was trying to win site approval for twin reactors. Plans to build at Lloyd Harbor had long since been abandoned, although the utility still had visions of ringing Long Island with reactors. State and federal hearings on Jamesport lasted from 1974 until 1978, when state regulators finally put a stop to the project.

LILCO customers, meanwhile, were becoming increasingly frustrated with a utility that for years had enjoyed a solid reputation. The rapidly rising cost of Shoreham's construction-and the impact of the 1973 oil embargo on a utility that was almost entirely dependent on oil-fired plants-put the company in a financial bind. Operating costs rose dramatically and higher costs dampened the demand for electricity, further squeezing profits. Thirteen rate increases between 1970 and 1981 turned customers against the utility.

The March 28, 1979, accident at Three Mile Island (TMI) marked a significant change in the political climate. Overnight, TMI refocused attention on Shoreham and made activists out of people who previously had watched from the sidelines. In June 1979, 15,000 demonstrators massed outside the plant in the largest demonstration ever held on Long Island. The same month, a small group of activists approached Irving Like, nearly a decade after his efforts on behalf of the Lloyd Harbor Study Group, to discuss how they could oppose the plant. Like suggested that emergency planning might be the last viable terrain on which to oppose the plant's opening, and he suggested that the activists concentrate on winning the support of local politicians.

In November 1980 the NRC adopted a rule requiring utilities to devise comprehensive emergency evacuation plans in cooperation with state and local authorities-a rule that would soon draw mainstream politicians into the battle over Shoreham and ultimately prove to be the plant's undoing.

At first, Suffolk County officials cooperated with LILCO in drafting an emergency evacuation plan. But as political opposition to Shoreham began to swell within the legislature-and the county intervened in Shoreham's operating license hearings-the relationship soured. The county eventually produced a report that raised serious doubts about the ability to evacuate the area surrounding the plant, and in February 1983 County Executive Peter Cohalan, citing safety concerns, declared that Shoreham should never be allowed to open. The next day Gov. Mario Cuomo announced that the state would not approve an evacuation plan over Suffolk County's objections.

The stage was set for a lengthy showdown over a local government's ability to veto the operation of a nuclear power plant by refusing to endorse a federally approved evacuation plan. Eventually, the NRC dropped its requirement for local participation in evacuation planning, and President Ronald Reagan signed an executive order directing the Federal Emergency Management Agency to make resources available for nuclear accident evacuation planning when state and local governments refused to participate. But that was four years later.


Snap, crackle, pop

While wrangling over evacuation plans continued, LILCO suffered other setbacks. In August 1983, as it was on the verge of getting a low-power testing license, Shoreham's three diesel backup generators suffered catastrophic crankshaft failure while undergoing tests, prompting one county official to dub them "Snap, Crackle, Pop." This episode cost LILCO $95 million in direct costs and more than $500 million in lost time, further diminishing the public's confidence in the utility.

Shoreham was declared complete on January 21, 1984. But with the company and the county still battling over the emergency evacuation plan, the date passed largely unnoticed.

LILCO finally won NRC approval for low-power testing, and at 5:48 a.m., July 7, 1985, the reactor went critical-insuring that the plant could not be abandoned without lengthy and costly decommissioning.

The same year, the New York Public Service Commission, in its first significant decision against Shoreham, ruled that LILCO would have to write off $1.4 billion in Shoreham-related costs-costs the regulators said had been imprudently incurred as a result of gross mismanagement.

Nature dealt another blow to LILCO in September 1985 when Hurricane Gloria pummeled Long Island, causing the vast majority of customers to lose power, some for as long as a week. When the utility's chairman and chief executive officer, William Catacosinos, appointed to save the company from imminent bankruptcy a year earlier, failed to return home from a European vacation during the crisis, it further strained the company's relations with the public. A month after the storm, a Newsday poll showed that seven in 10 Long Islanders thought Shoreham should be closed.

News in the spring of 1986 that fire had swept through the Chernobyl reactor in the Ukraine, spreading radiation over a wide area of the Soviet Union and Europe, fueled the call for a public takeover of LILCO. On July 3, 1986, the New York legislature created the Long Island Power Authority for that purpose.

In late 1987 the Public Service Commission turned down a LILCO request for an $83 million rate hike and suggested that the state and the utility negotiate an end to the Shoreham saga. After two more years of controversy, LILCO agreed to abandon its efforts to operate the plant. Although LILCO already has the highest electric rates in the nation, the deal calls for LILCO to receive annual rate increases ranging from 4 to 5 percent through the end of the century, as the utility's customers pay off about $4.1 billion of the $5.5 billion invested in Shoreham.


A skeptical public

After all that has transpired, some still believe that Shoreham should operate. Among them is Miro Todorovich, who heads a Manhattan-based group known as Scientists and Engineers for Secure Energy, who have been waging a legal battle to overturn the settlement and block Shoreham's destruction. Todorovich says the organization simply wants the public to have an opportunity to hear the unvarnished scientific and technical facts about Shoreham before it makes an irreversible decision on the plant's fate. If the facts were known, he contends, the public might take a different attitude toward the facility.

But a broad segment of the public no longer trusts the scientific and technical community to present unvarnished facts when it comes to nuclear power. In Shoreham's case, the public was repeatedly misled about safety and economics, as well as about the competence of those who were building the plant.

While the history of Shoreham is not typical of the industry as a whole, it contains what James Jasper, author of Nuclear Politics, has suggested were the seeds of the industry's demise: a technological establishment that was too quick to promote nuclear power and to paper over its deficiencies; a regulatory establishment that failed to set an appropriately deliberate pace for the development and de- ployment of nuclear power; and a utility establishment that with some notable exceptions seems only lately to have grasped the complexity of the undertaking.

Politicians and activists may have sought to exploit the public's diminished faith in institutions it had once trusted, but they would not have succeeded if the industry itself had not given the public cause for concern.

A last-ditch rescue effort

As far back as 1984, the Long Island Lighting Company (LILCO) quietly lobbied the federal government, hoping to win administration backing for its efforts to get the Shoreham nuclear power plant on line. The Reagan administration was sympathetic, but it never provided the kind of aggressive support LILCO felt it needed to fend off state and local opposition. "If the people of New York don't want Shoreham, that's their business," Reagan Science Adviser George Keyworth told reporters in 1984.

In fact, it wasn't until LILCO itself had reluctantly given up on the plant in early 1989 that the new Bush administration mounted a campaign to save Shoreham. Soon after the deal to close the plant was concluded, the Senate Energy Committee, under the leadership of Louisiana Democrat J. Bennett Johnson, issued a report challenging the state's contention that it would be cheaper to close Shoreham than to operate it. A month later, Energy Secretary James Watkins sent a letter to the head of the NRC detailing his objections to the destruction of the plant, arguing that it was "contrary to every principle associated with the establishment and maintenance of a sensible national energy policy," and inconsistent with efforts to insure a reliable supply of energy to the Northeast. The administration even invoked the National Environmental Policy Act-a favorite tool of nuclear power opponents-claiming that the NRC was obliged to look at the environmental consequences of abandoning a ready-to-run nuclear plant.

John Sununu, then President Bush's chief of staff (and an ardent supporter of the Seabrook nuclear plant when he was governor of New Hampshire) suggested that Shoreham was a "national asset" that should be preserved for future use. The remark prompted New York Gov. Mario Cuomo to demand an audience with Bush and his aides, at which he laid out the arguments for shutting Shoreham down. Later Cuomo parodied the administration's effort to keep Shoreham alive: "We just want to freeze it there until you die, Mario, and then maybe things will be different," he told a House subcommittee on energy.

With the Energy Department offering no specific plan to get Shoreham started, many speculated that the administration's motive was merely political-an effort to put a possible presidential challenger on the defensive, and to equip the president with an effective campaign prop for the defense of nuclear power. Others saw it as a genuine effort to come to the defense of an industry that, with the help of streamlined licensing procedures and safer plant designs could, in the administration's view, figure prominently in the nation's energy future. But within industry circles, there was a reluctance to force a belated and now unwanted rescue on a sister utility that for so long had fought "the good fight."

When the Gulf War raised the prospect of an oil shortage, lawyers at the Energy Department discovered that they might have grounds to order the plant into operation if they could claim it was in the national interest. There was another round of letters to the NRC, with Watkins "urgently requesting the commission to avoid taking any action that would hasten Shoreham's demise." The commission practically invited the Energy Department to step in and assert its authority over the plant. But in the end, the department never responded. Privately, the Energy Department had sounded out a number of utilities and discovered that the biggest obstacle to resurrecting Shoreham was that no one was willing to run it. With the war concluding, and oil in plentiful supply, whatever legal pretext the administration could use to justify a takeover vanished.

When the Bush administration first made Shoreham an issue, Governor Cuomo responded with remarks that now seem prophetic: "While they are stamping their bureaucratic feet, like so many political children, they'll get the same results children get: After a while they'll get tired and they'll stop."


Expensive shutdown

The nuclear power industry-and its critics-are expected to keep a close eye on Shoreham over the next few years as New York officials work to decommission the plant, ridding it of all vestiges of radioactive contamination. As the first large-scale U.S. nuclear reactor to be decommissioned, Shoreham is likely to yield valuable insights on both the technical requirements and the costs of decommissioning.

Already, detailed cost studies prepared for the Shoreham job suggest that the industry's estimates of future costs may be understated. The Long Island Power Authority-the state agency that will supervise the decommissioning-has projected that it will spend $186 million (in 1991 dollars) to rid Shoreham of a relatively small amount of radiation-the result of only low-power testing.

Philadelphia Electric, which operates four plants similar to Shoreham, has told the Nuclear Regulatory Commission that it will need $183 million (in 1990 dollars) to decommission each facility at the end of its useful life. Future decommissioning of Hatch 2 in Baxley, Georgia, a virtual Shoreham twin, has been pegged at $196 million.

Industry critics such as Ralph Nader's Critical Mass Energy Project charge that U.S. utilities are underestimating decommissioning costs, and they warn that there could be serious shortfalls in federally required set-aside funds when the bills come due. Privately, some industry officials acknowledge that utilities may be inclined to low-ball their estimates to avoid tying up valuable capital. "You don't want to lose control over any more money than you have to," said one official.

Several factors account for higher estimates at Shoreham and at the handful of other plants where utilities have had to present solid projections. First, while nearly all the technology needed to decontaminate a nuclear power station has been tested in other settings, the industry's experience with decommissioning is limited. To date, only three commercial power reactors have been decommissioned, the largest a 72-megawatt reactor at Shippingport, Pennsylvania, which was dismantled by the Energy Department. At Shippingport, the reactor pressure vessel, normally the most contaminated element of any plant, was simply removed and shipped intact to Hanford, Washington, for burial. At large commercial plants like Shoreham, the size of the vessel requires that it be cut into sections, a more complex process.

Disposing of low-level radioactive waste could also be a problem. In 1993, all states will be required to dispose of low-level wastes within their own borders or under compacts with other states, a requirement a number of states are finding difficult to meet, thus driving up the cost.

The actual decommissioning expenses, meanwhile, are only a small fraction of the total cost of shutting Shoreham down. In the first two years after it agreed to close Shoreham, the Long Island Lighting Company curtailed staffing and maintenance, but it has been forced to spend another $300 million on the plant-half of it for local property taxes, and the rest to maintain the plant according to NRC regulations. In addition, LILCO is expected to pay out more than $400 million in lieu of taxes over the next 10 years, a feature of the deal that was meant to help those communities that had come to depend on Shoreham's tax revenue. Total projected cost of the shutdown: over $1 billion.



Kinsey Wilson covers energy issues for Newsday, Long Island, New York