Westinghouse Electric Company "knowingly and willingly" entered into contracts promising to deliver uranium it did not have and made no attempts to get it, an attorney representing 10 major utilities charged today in U.S. District Court.
In an opening statement in a complicated breach-of-contract case, attorney Lewis Booker, told the court the nation's utilities and their customers should not have to bear the financial burden of paying for Westinghouse's "mismanagement." Booker represents Virginia Electric and Power Co., and nine other utilities, who in turn are representing the interests of several other companies in the antitrust action.
The utilities are seeking to force Westinghouse to delivery more than 70 million pounds of uranium to them at prices of between $8 and $12 a pound called for in long-term supply contracts Westinghouse told them two years ago it could not fulfill.
Westinghouse contends it was excused from performing the contracts under the U.S Uniform Commercial Code because unforeseeable events had occurred making it "commercially impracticable" to sell uranium to the utilities when it would have to find and buy the uranium from producers at more than $40 a pound.
Westinghouse cites the 1973 Arab oil embargo, the existence of a worldwide uranium cartel and certain government actions as the unforeseen events.
In an hour and 45-minute opening statement, Booker told to the court that Westinghouse is not entitled to use the doctrine of commercial impracticabilities. He said Westinghouse had knowingly taken a risk, failed to take any steps to assure adequate supplies of uranium when it knew it was short, and consistently misrepresented its supplies to the utilities.
"Westinghouse cavalierly let opportunity after opportunity pass to cover its obligations in 1973 when it could have done so at little loss," Booker argued, ". . . instead, Westinghouse sat idly by until the potential loss because so great that Westinghouse, a gambler to the end, decided it might persuade a court that it should be relieved from any liability."
Westinghouse decided to go short in February 1970, he said, at a time when it had only one contract for a delivery of 11.6 million pounds of uranium to it beyond 1976. Between February 1970 and today, Westinghouse has contracted to buy only 3.1 million pounds of uranium for domestic use although it has obligated itself to supply more than 95 million pounds for use in domestic nuclear reactors, Booker said.
At the same time it turned down opportunities to buy more than 50 million pounds of uranium for delivery between 1973 and 1985 at prices between $7 and $11 a pound. "Is that the type of business conduct section 11-615 (of the UCC) is designed to protect?" he asked.
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In his three-hour, 45-minute opening statement, Westinghouse counsel William R. Jentes contended that "mismanagement" was not at issue.
"It is abundantly clear that no one foresaw this situation," he argued. "No one thought uranium prices would be $25 a pound by the summer of 1975 and $40 after 1976." He said Westinghouse officials and others throughout the industry all believed there would be ample supplies of uranium at stable prices.
Jentes said Westinghouse had rejected some "alleged offers" to buy uranium during the period in question because they thought prices were too high and would drop eventually. They hadn't anticipated either the Arab oil embargo, which shifted some emphasis away from oil to other fuels, thus making them more valuable, or the existence of the international uranium cartel, he argued.
Jentes said that "no one, the utillties or Westinghouse, ever had any idea" that governments and producers were conspiring systematically to constrict uranium supply, allocate markets and rig bids in an effort to raise prices and to eliminate the middlemen - brokers like Westinghouse - from the uranium supply market altogether.
A foreign cartel allegedly had no effect on domestic supplies since the U.S. market was closed at the time to uranium imports. But Jentes said Westinghouse would introduce evidence of a "web of corporate interconnections" involving several foreign companies with substantial U.S. operations and U.S. companies with foreign subsidiaries.
He said their actions had an effect on the U.S. market and prices by their agreement to refuse to bid on utilities' contract offers in order to raise prices, and by agreeing not to supply uranium at fixed prices but at prices pegged to the workd price at the time of delivery.
In his stantement, utilities lawyer Brooker contended that Westinghouse knew in July 1972 that the cartel was fixing the price of uranium and allocating markets. Nevertheless, he said, it continued to find new contracts and pass up effers to purchase uranium.