This central Texas city is stuck with a $437 million investment that it doesn't want but can't unload, and which is sure to cost millions more.
Austin's albatross is the South Texas Nuclear Project (STNP), which looked more like a winner in 1973 when the city joined the partnership to build it in Matagorda County. But, as has happened frequently around the nation, the need for the new generating plant became less urgent as its cost climbed and conservation efforts succeeded. Austin itself has become a model of what conservationists have preached; its municipally owned electric company has shifted its focus from construction of large power generating plants to providing for growth through conservation.
Nationwide, since 1975, 116 power plants have been canceled, 85 of them nuclear. That represents more than the combined electric generating capacity of Texas and California.
But Austin's situation was complicated by the fact that it couldn't merely cut its losses by abandoning the partnership, because they would jeopardize its credit rating. Meanwhile, construction of The Nuke, as the project is referred to here, continues its claim on the city's purse.
In 1981, Austin voters approved the sale of the city's 16 percent interest in the project, which would have provided an escape from the predicament. But not surprisingly, no buyer stepped forward.
Money to pay for Austin's share in the project, which has been plagued by huge cost overruns and delays, would have run out in April. Not making the payments would have threatened Austin's bond ratings.
"I hate to vote another dollar for STNP, but our choice is between that and destroying the heart of this city while being stuck with STNP in the process," Duncan wrote. The additional authorization was approved with approximately 76 percent of the vote.
At the same time Austin's city council was seeking the funds to avoid missing payments on the power plant, it was trying another tactic to get rid of its share. On Jan. 6, City Attorney Albert DeLaRosa filed a lawsuit against Houston Lighting & Power Co., the managing partner of the project.
In the suit, the city claims it was misled by both the Houston utility and Brown and Root Inc., the firm that acted as architectural engineers on the project until September 1981. Brown and Root was fired and replaced by Bechtel Power Corp. shortly after releasing figures showing that the projected cost of the project had climbed from an initial estimate of $1 billion to between $4.4 billion and $4.8 billion. The latest estimate for the project is $5.5 billion.
Austin claims that Brown and Root did not have the expertise required by the project and that Houston Lighting & Power failed to manage it properly. Those failures, Austin argued, should entitle the city to sell its share in the project back to Houston Lighting & Power for the $437 million the city has already spent.
Otherwise, Austin is stuck for the forseeable future. If the city defaults on its payments, "that's a way to really get stuck with the plant," Duncan said. Doing so would mean that Austin would lose its right to choose an arbitrator to settle grievances that arise about the project.
In addition, the city would no longer be able to sell its share, because the other partners would have the option of buying Austin's percentage at cost up to the time operations begin, an option sure to discourage any other potential purchaser.
In addition to the Houston and Austin utilities, the city of San Antonio and Corpus Christi Central Power & Light Co. own shares in the project. San Antonio Mayor Henry Cisneros is said to have expressed a desire to unload part of that city's share in The Nuke.
In the meantime, the Austin electric utility department is buying into a lignite coal facility with the Lower Colorado River Authority. It is also trying to encourage conservation and power production by renewable energy sources to a large enough extent to eliminate the need for one additional power plant.
Among other things, the city provides free energy audits and below-market-rate loans for weatherization. Borrowers may repay the loans by adding their payments to electric bills. "We've found we can reduce electric use 30 to 50 percent on the average on commercial and residential buildings," said Duncan.
Most of the weatherization in Austin involves shading and other measures designed to beat the heat.
The utility runs other programs as well, including an appliance efficiency program. If customers buy energy-efficient air conditioners, for example, they can get a rebate from the electric company.
So far, the company has given away $300,000, but another $2 million has been allocated by the council. "We're now seeing a lot of big tract-housing builders joining in the program. That's very significant for the long run," said Laura Doll, a spokeswoman for the department.
Since the city owns the utility, it can easily dedicate money to such measures, rather than depending on federal money or on a public service commission ordering a utility to institute conservation measures. "We have a tremendous advantage," Duncan said.