United Technologies, a corporate behemoth already into rocket engines, space systems and electrical equipment, decided a couple years ago to add nuclear reactors to its futuristic enterprises.
At the time it seemed to Harry Gray, UT's empire-minded chairman, a respectably ambitious thing to do-quite a plum if he could pull it off. After all, such venerable technology giants as General Electric and Westinghouse had nuclear reactor divisions.
Outside of those two, however, there were only two other companies that made reactors: Combustion engineering and Babcock & Wilcox. B&W was the smallest. It was also the builder of the reactor at Three Mile Island, among other places. Gray moved to acquire the company, and in the process set off one of the most heated merger battles of 1977.
Gray eventually lost his bid for Babcock & Wilcox to a Louisiana drilling and engineering company which had decided, somewhat belatedly, that it wanted a reactor building division, too. The fight was a messy one, with troops of lawyers digging trenches on both sides and federal antitrust people hovering all around.
At a United Technologies shareholder meeting last week in East Hartford, Conn., Gray has asked whether, in light of recent events at Three Mile Island, he was happy about not ending up with Babcock & Wilcox. "Yes we are," he replied and, with that bit of understatement, moved on to the next question.
With the disabled reactor in Middletown, Pa., looking today about as inviting as a piece of radioactive ash, it is likely to be some time before another company tries as aggressively to put its hands on a piece of the nuclear business. Executives at J. Ray McDermott & Co., which paid $748 million in cash and stock for Babcock & Wilcox, have declined to comment publicly until tomorrow when they appear before the Nuclear Regulatory Commission to testify about Three Mile Island.
Clearly worried about the effect the accident at Three Mile Island will have on use of nuclear power, industry spokesmen are trying to sweep the disaster behind them and paint a rosier glow on the future. Lessons will be learned, they say. Existing reactors, they promise, will be made safer; new reactors will be safer still.
But, they argue, it is just plain economic fantasy to imagine that nuclear power is anything but he most feasible and least costly source of tomorrowa's electricity. "[The power companies] have no choice but to order unclear," Carl Walske, president of the Atomic Industrial Forum, told reporters last week, adding, "Nuclear power would have been dead by now if it hadn't been for the problems other sources are having."
The utilities themselves show no public signs of breaking ranks in their steadhy march toward a nuclear state. "We learn from [Three Mile Island] and we proceed," said S. David Freeman, chairman of the Tennessee Valley Authority.
And in an impressive display of industry brotherhood, more than 150 companies have banded together in a loose association called the TMI Recovery Group to rush equipment and personnel to the scene of the accident, "They know they have a lot at stake," said David Klucsik, a spokesman for Metropolitan Edison, operator of the TMI reactor.
Despite such efforts to stress the unbeat, the nuclear power industry is surely in for a rough ride, at least in the short team. Even before the Three Mile Island incident, the industry had fallen on hard times. High construction costs, a 12-year lead time and the continued debate over reactor safety had already inhibited the ordering of new reactors.
Only two reactors were sold last year, both by Westinghouse to the Commonwealth Edison Co. of Chicago, and there have bben no orders so far this year. The industry has the capacity to turn out 20 reactors a year.
Some utilities in recent months have scrubbed their orders, though there have been no cancellations yet in direct response to Three Mile Island. Others have stretched out the building time. Since 1973, there have been 37 orders and 39 cancellations-a net loss of two.
The cancellations reflect one other important factor that has affected the spread of nuclear power: demand for electricity in the United States has not grown as fast as expected. Largely because of escalating energy costs, the annual growth in demand for electricity has slowed from 7 percent to less than 4 percent.
This has left the energy cart racing a bit ahead of the horse. The U.S. today has the capacity to turn out far more electricity than it uses. The nation can produce 32 percent more power than is required on the hottest day. The optimum, say industry experts, would be somewhere around 20 percent.
Nuclear enthusiasts expect the lull in orders to continue another three years, enough time, they figure, for demand to build again-and for the memory of Three Mile Island to fade.
Since 1954, when President Eisenhower signed the Atoms for Peace Program, the nuclear industry has expanded into an $80 billion assortment of firms, from uranium mining companies to the power utilities. "Nobody has really defined the industry," said Carl Goldstein, spokesman for the Atomic Industrial Forum, the leading industry group. "It's an industry that cuts across many fields."
Goldstein estimated the industry employs about 300,000 people-from the giant contractors making the turbines to the hundreds of smaller firms supplying dials, switches and other parts.
Utilities in the United States are now licensed to operate 72 reactors generating about 13 percent of the nation's electricity. Permits have been granted for building 92 additional reactors, limited work authorizations have been issued for another four and 30 more are on order. Outside the United States, 155 nuclear plants are in operation.
The key to nuclear growth will be public acceptance, Walske of the industrial forum observes. Opinion had been running roughly 2 to 1 in support of nuclear power before the Three Mile Island accident. The episode has also made utility officials more wary of the financial risks involved. Walske last week raised the prospect of a "mutual risk" pact among power companies to limit the hazards-and costs-of another nuclear accident.
As for McDermott, Three Mile Island was only one in a series of misfortunes that has befallen the Louisiana firm, including a slump in offshore drilling and a federal price-fixing suit.
What is McDermott put Babcock & Wilcox back on the auction block? "We're not interested," said a spokesman for United Technologies.