Austin Debates Going Nuclear

Austin voters have trudged to the polls five times in seven years to decide whether the city should be a partner in the South Texas Nuclear Project, a twin-unit 2500- megawatt nuclear plant under construction 160 miles from Austin at Bay City on the Gulf of Mexico. The timing of the most recent vote, 11 days after the reactor accident at Three Mile Island, focused national attention on the election. Cameras from major television networks zoomed in on election workers tallying votes at the city’s electric building while commentators strained to divine the future of nuclear power from the returns. Votes from the last boxes gave the edge to Austin’s continued participation in the nuclear project. By a 51 to 49 percent margin voters turned down the proposition that Austin should sell its share, and by a 53 to 47 margin additional bonds were approved to finance cost overruns at the plant. 

The vote was a victory for nuclear power in Austin and for the city’s electric department, the Chamber of Commerce and the city’s financial elite, who have promoted energy growth and the nuclear project. On the other hand, Austin’s nuclear experience has been unique, and the vote was still too close to point to a national mandate on the nuclear issue. The most telling lesson of the April referendum is how uneasy the city’s association with nuclear power is. “No issue,” says Bruce Hight, chief chronicler of energy news for the largest daily newspaper, “has rubbed as persistently and as painfully at Austin’s body politic as its participation in the South Texas Nuclear Project.” 

Since the City of Austin Electric Utility first began producing electricity in 1895, it has served the dual purpose of providing both electricity for Austin consumers and revenue for the city’s coffers. Profits from the city’s electric system swelled the city’s general fund last year by $17 million, which is two-thirds the amount raised by property taxes. Because large chunks of Austin land occupied by the state government and the state university are tax-exempt, a loss in profits from the utility would mean an increase in property taxes. The utility, an electric department publication asserts, “provides a very equitable means of obtaining revenue from tax-exempt sources.” Since the number of city property taxpayers is much smaller than the number of electric customers, the profit-oriented utility is very important to the city’s well-being, and has generally been indistinguishable from Texas’ private utilities in promoting energy growth. 

Among municipal power systems, the Austin utility is a large one, ranking eleventh in the nation in the number of customers. Most of the growth came in the boom following World War II. In 1945 the city could produce 22 megawatts of electricity. By 1972 the utility had a generating capacity of 1,000 megawatts — all produced by natural gas — and the electric department was calculating an annual growth rate in electric consumption of 13 percent a year. 

It was in this halcyon period of energy growth and abundant money that the city staff first proposed that Austin get into nuclear power. Two large private utilities — Houston Lighting and Power and Central Power and Light Company (a subsidiary of Central and Southwest Corporation) — were collaborating on plans for a nuclear plant, and they invited the Lower Colorado River Authority (a central Texas version of TVA) and the city utilities in Austin and San Antonio to join as partners. The plant was in the initial planning stages at this point; a building site had not even been selected. 

“Back in the early ’70s nuclear power was the in thing with utilities,” says Roger Duncan, one of nuclear energy’s most persistent local foes. “Every ‘modern’ utility wanted to have nuclear as part of its fuel mix.... It was a new toy in a way.” 

September 9, 1972, was set as election day for approving $433 million in construction projects, 289 million of it earmarked for a 19.6 percent share in the nuclear project. 

In the first of its many editorials endorsing the project, the Austin American admitted that there were “legitimate safety concerns” about nuclear power but attempted to neutralize the issue by pointing out that the plant would be built whether Austin participated or not. “We support . . . the bond election, as absolutely necessary to the orderly growth of this city.” 

But three days before the election, in a move that the Austin American labeled “dirty pool,” the Lower Colorado River Authority directors pulled out of the project. “We have decided not to participate,” they announced, because of their “feeling that nuclear power plants are still in the experimental stage and that the economics of such plants are questionable.” 

Austin voters rejected the nuclear project by a narrow margin, while passing all the other construction projects and approving the addition of fluoride to the city’s water. The nuclear option seemed closed, but during the following year, several events shook the confidence of Austin’s populace in complete dependence on natural gas for electricity. 

A full year before OPEC made “energy crisis” a household phrase, people in Austin talked of little else. Austin’s crisis started on November 6, 1972, when Lo-Vaca Gathering Company, the city’s natural gas supplier, called R.L. Hancock (manager of the Austin utility) to say that the gas supply to the electric generators was being cut back. The company at first claimed “mechanical problems,” but within a few days Austin learned the grim news: Lo-Vaca did not have enough gas to live up to its contract. 

Lo-Vaca had won a 20-year contract from Austin in 1962 to supply natural gas at a low, fixed price. The fledgling company had also wrapped up contracts with Corpus Christi and San Antonio. During that winter of ’72, a particularly cold one by Texas standards, the natural gas supply was curtailed on 65 days. The city’s boilers were forced to switch to fuel oil, but oil could not be burned for long without serious maintenance problems, and was hard to find — especially since San Antonio, 80 miles away, was in the same fix and was competing for the oil supply. Street lights in Austin were dowsed at midnight, and one week in January the University of Texas campus was closed and registration for the spring semester postponed due to inadequate heating supplies. 

There was a breathing spell in March and April, says Hancock, “and then in May the bottom fell out. The most harrowing experience I personally had was one day in May when we had a day and a half of fuel at our major plant, and there wasn’t another utility that could spare any. We really had to sit down and consider whose lights were going to be cut off.” 

With the citizenry’s attention riveted on the problems that can arise from having all your energy eggs in one basket, the city council appointed a citizen’s committee to work with the electric department on a plan for future energy needs. The product of that collaboration was the city’s Electric Generation Plan, released in mid-October, 1973. A bond election to finance the plan was called for November 17th. Proposition I designated $236 million for an oil-burning plant and $228.6 million for a coal or lignite-burning plant. Proposition II called for $161 million to buy up to a 16 percent share (400 megawatts) in the South Texas Nuclear Project. (At that time the total estimated cost of the STNP was one billion dollars. The Bay City site had been selected, but construction was still not underway.) 

The campaign to pass the bonds was short and heated, with the city staff taking an active part. City manager Dan Davidson reported to the Austin American that his staff was scheduled to speak for the plan at 78 meetings. 

SAVE (Save Austin’s Valuable Environment) and other environmental and neighborhood groups organized to fight the STNP. These organizations held frequent press conferences, but they couldn’t finance a campaign to match the barrage of city-produced literature. The city printed 10,000 copies of five pro-nuclear brochures, including a four-color report on STNP called Electricity for the ’80s and Beyond. Every householder found a flyer promoting the nuclear bonds in the envelope with his or her monthly electric bill. 

On election day the oil and coal plants passed by a 21,092-vote margin, but the STNP barely squeezed through with 722 votes to spare. The voter turnout was very light. Nevertheless, the next morning the Austin American proclaimed, “Austin Propelled Into Atomic Age,” and Austin was launched into the new generating plan — one that would generate far more electricity than the city would require, but which promised “diversity” of fuel sources. 

The electric department soon became a major source of public outrage as electric bills soared. In 1974 a 17.8 percent rate increase was approved by the city council, but what really hurt customers when they opened their monthly statements was a new item on the bill termed “fuel cost adjustment.” After the natural gas curtailments of 1972-73, the Texas Railroad Commission — the powerful state agency that regulates oil and gas — allowed Lo-Vaca to wiggle out of the fixed-price provision in its contracts. By 1975 Austin was paying Lo-Vaca nine times the original contract price, and the Austin utility passed these increased costs directly on to its customers through the fuel cost adjustment. For most consumers, the fuel cost was higher than the electric rate, and owners of air-conditioned, all-electric homes found that their monthly electric bill often exceeded their mortgage payments. 

The promise of lower utility bills had been a major selling point for the new coal and nuclear plants, but those lower bills were now described as “the light at the end of the tunnel.” They could not become a reality until the early 1980s when the new nuclear plant, with its allegedly lower fuel costs, would start operating. In the meantime, the department could see nothing ahead but rising prices for its customers. 

The price of electricity was a major issue in the 1975 city council election. Former councilperson Jeff Friedman swept into the mayor’s office by vowing to lower the rates for small electricity users, and he appointed an electric rate commission to come up with a plan. 

The commission found itself locked into the fuel adjustment costs on the one hand and long-term contracts at fixed rates with the two largest electric users — an air force base and the university — on the other. In addition, the national pitch for energy conservation was seen as a threat to the profit-based utility. Low electric use meant higher per-unit costs, lower profitability and the spectre of rising property taxes. There was not much financial maneuvering room for the commission to restructure electric rates. 

The commission began searching for ways to slash expenses just as the first bad news about the nuclear project hit the papers. Westinghouse announced that it was reneging on its contract to supply uranium for 10 dollars a pound; instead, it planned to quadruple the price. Austin filed suit, but more bad news followed. The first cost overrun at STNP would add $18 million (11 percent) to the price Austin had to pay for its share. 

Margaret Hofmann, a councilperson with strong anti-nuclear sentiments, produced a study forecasting more cost overruns as well as rising uranium prices. She contended that the nuclear project was no longer a good deal. The electric department disputed her finding with a study of its own, arguing that the STNP was still the cheapest alternative for energy, despite the soaring uranium and construction costs. 

With support from the electric rate commission, Hofmann pushed for an election to authorize the city to withdraw from the nuclear project. A new state law prescribing dates for local elections forced her to settle for an August, 1976, election. “It was bad timing,” admits Roger Duncan, then Hofmann’s aide. “The students [usually strongly anti-nuclear] were out of town, and there wasn’t much time to campaign.” The proposition to get out of STNP failed by a two-to-one margin. Austin’s continued participation seemed assured. 

In 1977 a more conservative mayor, Carole McClellan, took office. For the electric department, that year was the quiet before the storm. The calm ended in March, 1978, when the Texas Mobilization for Survival, an anti-nuclear group, unveiled its economic study of the STNP. It predicted that the plant’s cost would rise to two billion dollars.

Numerous cost estimates were bandied about during the following months. STNP participants created a special task force to investigate the problem. Their report, issued in November, 1978, confirmed the Mobilization’s prediction — the STNP would cost two billion. The estimated price had doubled since 1973, and to retain its share Austin would have to come up with an additional $160 million. 

The task force pointed to construction delays and to grossly inaccurate engineering estimates of material and labor costs; inflation, it said, played only a minor role in the rise in costs. The report stated that 122 percent more steel would be required than originally estimated; 83 percent more concrete; 88 percent more piping; 100 percent more wire and cable; and 200 percent more person-hours of labor. The report also predicted that the first unit of the project would be at least 18 months late. 

“The calculations did shake us initially,” allows R.L. Hancock. He adds, “It was hard to see how a reputable, experienced engineering firm [Brown & Root] could be so far off.” But he contends that STNP doesn’t look so bad “after looking around at what has happened to other engineering firms and other [nuclear] plants.” Within a few days the electric department churned out another study that took into account the overruns and also the new price contract for uranium that had just been negotiated in an out-of-court settlement with Westinghouse. The department’s study still predicted “significant economic advantages” through continued participation in the project. 

The city council, fresh from a skirmish with the department over misinformation about funding for the coal plant, was skeptical of the utility’s new STNP study. Three council members wanted to get out of STNP and three were cautiously urging continued participation. Mayor McClellan was the swing vote.

In a December 5th interview with Austin American-Statesman’s Bruce Hight, she indicated that “she was leaning toward getting out.” But on December 14, she announced: “I strongly believe in energy diversification. Therefore I support some participation.” She advocated keeping a stake in the plant, but did not favor committing further funds to STNP. The city staff had circulated a memo warning that selling all of the city’s share of the STNP would create serious financial problems, and this perhaps helped to influence McClellan against complete abandonment of the nuclear project. 

Seven hundred people turned out for a city council meeting called to decide the wording for the nuclear proposition on the January, 1979, ballot. About two-thirds of the crowd was pulling for a straight “yes” or “no” vote on selling Austin’s entire share. But the wording the council adopted for Proposition 14 — by a four-to-three vote — asked for authorization for the city to sell off only that portion of its share in the STNP that could not be financed by the original $160 million investment. 

Proposition 14 failed at the polls in January. “I have a lot of theories as to why it didn’t pass,” says McClellan. “One is that it didn’t please either camp . . . those who wanted in completely or those who wanted out.” Members of Austin Citizens for Economical Energy (ACEE), a group headed by Duncan, wanted out completely. Duncan acknowledges that to win this specific referendum, ACEE waged a campaign “that would appeal to the pro-nuclear vote.... We won 54 percent of the vote,” and he feels that “five to 10 percent was pro-nuclear” — people who wanted to retain a full 16 percent interest in STNP. 

Defeat of Proposition 14 meant that the council did not have voter approval either to sell Austin’s share or to pay for it. A staff memo informed the council that they could issue revenue bonds without voter approval, but McClellan emphasizes that “never has that been done in Austin, and I would never do it.” Another bond election was called for April, to coincide with the city council’s own election. 

Again, the wording on the ballot was crucial. “I believe we really lost the election when the council decided to set up the ballot as they did,” contends Duncan. He maintains that the issue was clouded by the fact that two of the four propositions on the ballot dealt with coal facilities to replace South Texas, making it appear that Austin had only two options — coal and nuclear. The coal proposition called for $433 million, “which included the mining, the transportation cost, everything. . . . And then, of course, they just put the cost overrun of the nuke [a little over $215 million] on the ballot and ran a campaign saying that it was obvious which was cheaper. Nuclear was cheaper.” 

“We had to word the ballot as we did,” McClellan claims, “because we had been advised by our bond attorneys that if we had a vote to get out of STNP we would have to replace that with a new facility of equal value.” 

Frank Cooksey, an attorney who serves on a committee of the state’s energy advisory council, disagreed with the city’s bond advisors. “Sale of the [city’s share in the] project would have brought in cash or the equivalent, and if the proceeds were put into an escrow account,” he maintains, “it would give adequate security to bond holders.” His arguments didn’t sway McClellan.

After the Three Mile Island nuclear reactor started spewing out radiation on March 28th, the wording of the ballot seemed irrelevant. “It would take a political genius to pull this one out,” John Rogers, who managed the pro-STNP campaign, told a reporter on the weekend just after Three Mile Island. “I’ve never been involved in a situation where we don’t have any control, where the opposition has the lead on CBS, NBC and ABC television; all three local television stations; the lead story in both daily papers.” The following Wednesday McClellan looked at the logs of pro-STNP phone banks, and she says, “I had never seen a higher negative on any issue.” But that was the day that McClellan’s own reassuring and frequently repeated television spots began. 

McClellan remembers that her decision to prepare the media spots in support of STNP was made after “I spent Saturday and Sunday talking with people at Three Mile Island. I re-examined my position and came back to the same conclusion. I decided to pull out the stops and let everyone know where I was.” 

Her ads emphasized that safety features at Three Mile Island had worked, that Austin needed energy, that the nuclear power project was the cheapest alternative, and that Austin might as well get its share of the energy since the project was going to be built anyway. 

Television advertising sponsored by ACEE — and there was a lot of it — carried exactly the opposite message to the voters. Duncan says, “We tried to point out that Austin did not need the energy coming from that plant, that safety and other factors . . . would definitely delay us, that nuclear plants were not dependable, and that we would be facing even further cost overruns in the future.” ACEE was also pushing the city to promote insulation and other conservation measures — and solar energy. 

“I knew they would be gaining ground the whole week” as Three Mile Island faded from the news, recalls Duncan, “but I really felt that we would win it with them snapping at our heels.” 

But, once again, Austin’s 16 percent share of the nuclear project was pulled from the jaws of defeat. It was saved by the mayor and a coalition from the Chamber of Commerce, Austin’s well-heeled citizens (people who raised $85,000 for the campaign from contributions of over $50 each), and the city government. This coalition is the same group that first sold the project in 1973 and has protected it through each successive election. Unlike the November, 1973, bond election — where city staff spoke at dozens of public meetings and the utility barraged its customers with fancy leaflets — this time the city staff and the utility both kept low profiles and the pro-nuclear forces depended largely on mass media promotion. Ultimately, Mayor McClellan’s television ads played the pivotal role in swinging the voters back to supporting the STNP. 

Austin’s participation in the nuclear project continues to be uneasy. In August the cost of Austin’s share of the STNP jumped by at least $64 million. Although the city council had anticipated another overrun — the $215 million figure on the April ballot was intentionally $55 million more than immediately needed — it was unprepared for the cost to escalate so quickly or so drastically. While still defending nuclear power “as the most economical approach,” McClellan has focused her anger on Houston Lighting and Power Company’s management of the project. The council is seeking to get a handle on the costs through an independent audit, but nuclear critics foresee even more overruns in the future. They are beginning to plan for another vote. 

The nuclear project has other problems besides spiraling costs. The STNP has requested an operating permit from the Nuclear Regulatory Commission, and a battle is brewing over the question of whether the plant can operate safely (see sidebar). 

The basic issue, however, is whether power from the plant will ever be necessary at all. Austin already has power plants that can generate 2,000 megawatts of electricity, even though the city has never needed more than 774 megawatts at any one time. (Some of the excess is sold to Houston Lighting and Power.) In fact, the plant’s justification rests on the assumptions that electricity consumption will continue to grow rapidly over the next 15 years, that solar power and related technologies won’t be useful during that period, that natural gas will become increasingly scarce (and thus far more expensive) and that nuclear power will remain the cheapest source of electricity — all highly debatable assumptions at best. In light of all this, the question persists: why, just one week after the ominous warning of nuclear disaster from Three Mile Island, did 51 percent of the voters mark their ballots against selling Austin’s share of the nuclear project? It’s true that the nuclear plant is 160 miles away, and many people didn’t believe that Austin could stop it from being built anyway. But Duncan concludes that people still basically believe in the expertise of the utility company and the rest of the pro-nuclear coalition. “I just don’t believe the anti-nuclear movement has any credibility yet,” he says. “I think that is shifting, but it hadn’t shifted to the point where we could win an election this April.” 

In the face of cost overruns, however, public faith in the utility company may waver.