THREE VERY LARGE government projects -- the Tennessee-Tombigbee Waterway, the Clinch River breeder reactor and SRC I (the solvent refined coal project) -- come before Congress this week. All richly deserve to be defeated.
What else do these projects -- a canal connecting the Tennessee to the Gulf of Mexico, a breeder reactor demonstration plant, and a plant to make solid and liquid fuels from coal -- have in common? All three are to be paid for entirely or largely from federal government funds. All have incurred immense cost overruns beyond expenses due to delay and inflation. All are way behind schedule. All are extremely expensive -- between $3 billion and $4.5 billion. And none of the three makes economic sense.
It took 25 years from the time the Tenn-Tom was first authorized for Congress to become sufficiently persuaded of its merit to appropriate money for it. Congress was right the first 25 times. The canal's cost has ballooned from about $300 million a decade ago to $3 billion, but less than 20 percent of its projected benefits for the last five years actually materialized. Nearly everything else about the project is uncertain, including where the canal could sensibly end, which direction barge traffic on it will travel, who would use it and for what, and whether the benefits would ever exceed the costs of construction.
Since Clinch River was first proposed, the rationale for plutonium breeders has evaporated. Only a large and growing number of traditional nuclear electric plants, using up the available uranium fuel, would offset the breeder's greater cost and make it economically competitive. But in the last few years projected nuclear demand has plummeted, estimates of uranium availability have risen sharply, and the price of uranium has dropped. Meanwhile, the cost fo the Clinch River plant alone has risen fivefold -- to $3 billion -- and construction has not even begun. Utilities lobby strongly on Clinch River's behalf, but do not put their money behind it: the private share of the cost is now down to 9 percent. European breeder programs, including the most ambitious in France, are on hold or being re-evaluated.
The SRC I project is the youngest of the three, but it may already have set the record for cost overruns: up 99.8 percent in 18 months. As in the case of Clinch River, the government would bear most of the costs -- up to 97 percent, depending on how successful the project is. The revenues now being projected by the principal contractor assume that the solid and low-grade liquid products will sell at the equivalent of oil priced at $76 a barrel, which is very unlikely. The project suffers from a number of basic design flaws.
None of these projects will yield benefits commensurate to the government's investment. Some may yield none at all. Termination would be the best choice even if there were plenty of money available. But at a time when badly needed government programs are being cut to the bone, their presence in the budget is an affront. p