The "Whoops" drama dragged on yesterday as proponents of federal aid for the embattled Washington Public Power Supply System tried to separate the default on bonds for two abandoned nuclear power plants from bonds to finance completion of two other plants.
Opponents of federal aid to WPPSS briefly filibustered in the Senate against efforts by Sen. James McClure (R-Idaho) to force through a rescue effort as a rider on an appropriations bill.
McClure is expected to try again today to pass legislation creating a new organization to finance construction of two partially completed WPPSS plants.
Meanwhile yesterday, Chemical Bank, trustee for the bondholders who financed the canceled projects Nos. 4 and 5, filed a long-expected lawsuit in U.S. District Court in Seattle in an attempt to recover some funds for investors. The people who bought the bonds stand to lose $2.25 billion in the largest municipal bond default in history. The suit accuses WPPSS, its 23 members, the 88 participating utilities in the two projects, the Bonneville Power Administration and various advisers of fraud and mismanagement.
The proposed legislation would allow BPA, a federal government agency, to create a new entity separate from WPPSS to raise approximately $1 billion to finish plants Nos. 2 and 3. WPPSS unit 2 is 98 percent completed and number 3 is 78 percent completed.
Revenues from power produced by the two plants would pay back investors and would be legally out of the reach of creditors who hold the defaulted bonds on projects 4 and 5.
Without the federal legislation separating the plants, Wall Street underwriters will not touch any more bonds for WPPSS. Bonneville, which sells electric power in the Northwest, has agreed to back any new bonds.
Chief opponent of the maneuver is Sen. Howard Metzenbaum (D-Ohio), who objects to what he considers a federal bailout of WPPSS with the taxpayers picking up the tab. He also criticized McClure for trying to ram the bill through without debate as a rider on an appropriations bill.
Metzenbaum tried unsuccessfully to stop McClure's bill on the Senate floor on a point of order, then started a filibuster.
Metzenbaum's contends that Bonneville already owes the Treasury $7 billion and a "Son of Whoops" would only increase that debt.
At the request of the Treasury, McClure included language that would bar BPA from seeking appropriated funds from Congress or borrowing from the Treasury.
Deputy Treasury Secretary R. T. McNamar wrote McClure that the Office of Management and Budget would have "no objection" to the bill provided it specified that the ratepayers in the region receiving the power generated by units 2 and 3, and not the federal government, would be responsible for paying all the costs. BPA Administrator Peter T. Johnson said rates had already increased by 30 percent this year but declined to say how much more they would have to rise to cover costs.