A $1.6 Billion Nuclear Fiasco

By Robert T. Grieves

Mismanagement and safety lapses endanger an Ohio plant

Looming 479 feet over the Ohio River, the concrete cooling tower of the Wm.

H. Zimmer Nuclear Power Station dwarfs tiny Moscow, Ohio (pop. 326), a village 23 miles east of Cincinnati. But the citizens of Moscow expect the Zimmer plant to change more than the local skyline. When completed, it will not only provide 810 megawatts of power to southern and central Ohio but also bring as many as 20 jobs to Moscow. In addition, notes Mayor Eugene Holland, it will mean more than $500,000 a year in property taxes.

The civic enthusiasm may be premature. The nuclear plant, under construction since 1972 and now 97% completed, may not begin operating for three more years, if it ever does. Its long and sometimes tumultuous development has been marked by runaway costs, faulty construction, mismanagement by the utilities that own it, and inadequate supervision by the Nuclear Regulatory Commission (NRC). Earlier this month the three owners--Cincinnati Gas & Electric, Dayton Power & Light, and Columbus & Southern Ohio Electric--began to consider their options. Among them was the sobering possibility of abandoning the project. Such a move would turn Zimmer into nuclear America's biggest white elephant to date, and a woeful, if extreme, example of the quality-control problems besetting other nuclear projects around the country.

Zimmer's costs have ballooned alarmingly. The initial estimate, in 1969, was $240 million. So far, the three utilities have spent $1.6 billion. The Bechtel Power Corp., brought in a year ago to help manage the plant's construction, last month came up with the latest projection. The proper completion of the plant, says Bechtel, would raise the total to a staggering $3.1 billion. While the utilities ponder whether to continue with Zimmer, interest charges on loans taken out as long ago as 1971 keep piling up. Each day's delay means $500,000 added to the tab.

Bechtel's estimate stunned Wall Street as well as the plant's owners. Cincinnati Gas President William Dickhoner tried to quell the fears of financiers, vowing to "consider very carefully the implications of such a dramatic increase." The following day, however, Moody's Investors Service downgraded the ratings of the three utilities. Two other services, Standard & Poor's and Duff & Phelps, put the utilities on a credit watch. Fearful of bankruptcy, Columbus & Southern Ohio Electric and Dayton Power & Light have asked the Hamilton County Common Pleas Court to rule on who would be liable for the $1.6 billion should the project collapse. Says Gerald Morgan, an analyst with Prudential-Bache Securities: "You have the three utilities fighting among themselves as to who is to blame for all the mismanagement."

Beyond Zimmer's financial debacle lies the issue of shoddy construction at the plant. In an effort to contain costs, Cincinnati Gas tried to skimp on quality-control measures and personnel. In November 1981, the NRC fined the utility $200,000 after discovering the first of some 15,000 violations of its quality-assurance regulations. A year later, the commission halted construction because of Cincinnati Gas' continued failure to meet its quality guidelines, the first time that the NRC had ever taken such a step when construction was so far advanced. Some of the steel used at Zimmer was scrap that was arbitrarily upgraded on the site. About 70% of the welds on the plant's structural beams did not meet industry standards. To test the welds now, inspectors will in some cases have to cut out at random one made by each of the hundreds of welders who have worked on the project, examine it and then accept or reject the rest of that welder's work on the basis of the sample. Given the difficulties of these and other tests, the utilities may find it easier simply to junk the plant.

The construction problems were discovered almost by accident. Private Detective Thomas Applegate, 32, hired by Cincinnati Gas in 1979, concluded that safety-related building lapses posed a greater danger to the plant than the doctored timecards he had been directed to investigate. The utility ignored Applegate's allegations and fired him in 1980.

He turned to the NRC, which after an initial investigation found no problems at Zimmer.

Applegate then appealed to the Institute for Policy Studies, a Washington think tank with a history of championing Government whistle blowers.

Thomas Devine, a lawyer with a division of the institute, agreed to challenge the NRC findings and to charge the agency with violating its own ground rules for investigations.

Says Devine: "I realized that this was a very dangerous power plant when every witness I talked to said that once the plant was finally done and it was switched on, they wanted to be at least 100 miles away from it."

Prodded by Devine's charges, the NRC made a second investigation and discovered that Cincinnati Gas did not keep proper records of the welds or of the origin of materials used at the plant, and did not test welds according to NRC specifications. The agency labeled the quality of work at Zimmer "indeterminate."

Meanwhile Devine was able to show, as a result of a Freedom of Information Act lawsuit he brought in federal court, that an NRC official had ordered his investigators to withhold and even destroy documents disclosing problems at Zimmer.

James Cummings, director of the NRC'S Office of Inspector and Auditor since 1978, was transferred out of his job as the controversy grew. Cummings claims that the agency lost confidence in him after he forgot to turn over key documents. Says he: "I simply screwed up, and I've been going all around town saying mea culpas ever since."

Despite its uniquely disastrous features, Zimmer is far from the only instance of mismanagement among nuclear facilities. For example, of the five plants belonging to the ill-starred Washington Public Power Supply System (WPPSS), known as Whoops, only one, Project No. 2, stands a chance of being completed soon. "Zimmer is clearly the glaring example of construction goof-ups," says Jan Strasma, a spokesman for the NRC, "but there are other plants [being built] around the country where the quality-control program has fallen on its face." Among them:

P: Clinton Nuclear Power Plant No. 1, near Clinton, Ill. At the time construction began in 1976, this plant was expected to cost $429 million. The latest estimate: $2.8 billion. During its construction, it has suffered delays because of safety and design problems. Says Strasma: "They just got so far behind in doing inspections that they finally had to stop construction to get caught up." Its completion has been moved back from 1984 to 1986.

P: South Texas Nuclear Plant, Bay City, Texas. Houston Power & Lighting broke ground for this plant in 1976, when it was expected to cost $1 billion and be in operation by 1981. Because of quality-control costs, design changes, and construction delays that prompted litigation, its price tag has grown to almost $5.5 billion. It may go on line in mid-1987.

P: Diablo 2, Diablo Canyon, Calif. Owned by Pacific Gas & Electric and begun in 1970, Diablo has encountered errors in design aggravated by the fact that it is positioned over a major fault in the earth.

These complications have helped pump up the cost estimate from $420 million to $4 billion and delayed its opening by ten years. It is expected to begin operations next year.

Under belated pressure from the NRC, Cincinnati Gas has begun revamping its Zimmer program. Most of the old managers have been removed, and Retired Admiral Joe Williams Jr., a former Atlantic Fleet submarine commander, has been named Zimmer's new top manager. He is awaiting the results of a Nov. 1 public meeting in Cincinnati, where Cincinnati Gas' proposed new program for Zimmer will be discussed before the NRC rules on it. "What I'd like now," says Williams, "is for people to stand back and let us complete the plant properly, as cheaply as possible." -- By Robert T. Grieves.

Reported by Jay Branegan/Washington and Barbara B. Dolan/Moscow, Ohio

With reporting by Jay Branegan; Barbara B. Dolan This file is automatically generated by a robot program, so viewer discretion is required.