Seabrook snafu

THE freckle-faced Seabrook guide points up at the gray concrete containment dome. ''It's built to withstand a head-on crash of an FB-111 jet,'' she assures visitors. And ''it's set on solid bedrock.''

But nowadays, the financial footing of this incomplete nuclear power plant is no firmer than the salt marshes that stretch a mile east to the Atlantic Ocean.

Ten years ago, when the project started, the bill was to be $900 million. But inflation, strikes, demonstrations, new federal regulations, and mismanagement have taken their toll.

This month, the Public Service Company of New Hampshire (PSNH) - which is building the twin-reactor nuclear plant - scratched out last year's price estimate of $5.2 billion. The tag now reads $9 billion. And that is a conservative guess, say utility critics.

To pay for the plant, consumers' electricity rates in New Hampshire may jump anywhere from 60 to 100 percent if just one of the two units is finished.

But New Hampshire ratepayers won't shoulder all the cost. Fourteen utilities in Maine, Vermont, Massachusetts, and Connecticut have a slice of the Seabrook pie. Rates could rise some 25 percent in these states.

One after another, over the last 18 months, the joint utility owners have called for the cancellation of Seabrook's Unit II, reported to be 23 percent complete. Last September, PSNH agreed to a half step: Unit II was mothballed after an investment of almost $1 billion.

Some of Seabrook's joint-owners are now questioning the wisdom of Unit I - which PSNH says is 73 percent complete - and most are pushing for actual cancellation of Unit II. Eighty percent of the owners must agree on such a move. PSNH can block any decision with its 35 percent share.

''The leading impediment to cancellation (of Unit II) is the uncertainty of PSNH's investment if they abandon the plant,'' says Douglas Foy, executive director of the Boston-based Conservation Law Foundation, a nonprofit environmental organization. ''There is a serious question as to whether they can get the money from ratepayers,'' says the utility critic.

Mr. Foy is referring to the ''anti-contruction work in progress'' law passed by the New Hampshire Legislature in 1979. The law keeps construction costs from being passed on until the plant is ''actually providing service to customers.''

A case testing the anti-CWIP law was sent to the New Hampshire Supreme Court two weeks ago. The court was asked to rule on a request by PSNH to pass on the costs of a canceled Massachusetts reactor to consumers. PSNH spent $16.5 million on Pilgrim II, which was scrapped three years ago. A decision, expected within six months, is likely to set the precedent for recovery of costs for Seabrook's Unit II, if it is canceled.

''If PSNH can't recover that money on Unit II, they would be bankrupt by the loss. And they would persist (with Unit II) until the bitter end,'' Foy predicts. Value Line Investment Survey's most recent analysis of PSNH offers a similar assessment.

Lately, bankruptcy is being mentioned more often.

Gov. John H. Sununu's (R) unflinching support for Seabrook wavered for the first time this month, when he said the time had come to ''reassess'' the project. He accused PSNH of mismanagement, but vowed to prevent its bankruptcy.

South of the border, Seabrook's two largest utility partners may face financing problems that could cause PSNH some additional concern.

Last August, the state of Connecticut ordered United Illuminating Company (with a 17.5 percent share in Seabrook) to pull out of Unit II as soon as possible. One avenue the company is considering is to stop financing its share of the Seabrook venture. Such a step would probably be contested in court.

In Massachusetts, the Department of Public Utilities has refused to allow Eastern Utilities Corporation to give $16 million to a subsidiary with a 2.9 percent stake in Seabrook. Late last month the DPU said Eastern hadn't shown that Seabrook was a reasonable investment.

The sum in question is relatively small but holds important implications. Massachusetts Municipal Wholesale Electric Company will soon be seeking DPU permission to raise $322 million to cover part of its 11.6 percent share in Seabrook. The Eastern decision places this financing in doubt.

''As soon as any joint owner stops paying, the project could collapse. No one can afford to cover the shortfall,'' says Foy.

The cheapest out for ratepayers would be to let PSNH go bankrupt and let bondholders and shareholders take the brunt of the costs, according to Foy.

Wall Street is aware of the growing risk. Last Friday, Moody's Investors Service cut the credit rating of PSNH. Moody's stated Unit II posed a ''grave risk'' to the utility company.

Nonetheless, says Mark Luftig, a vice-president at Salomon Brothers brokerage firm, ''PSNH is not likely to go bankrupt. We saw a review of the whole bankruptcy issue with General Public Utilities after (the 1979 accident at) Three Mile Island. Public utility commissions have agreed bankruptcy is not a viable option.''

And Douglas Foy is not advocating bankruptcy. ''It may be cheaper for the consumer, but it is a lousy way to set regulatory policy.''

Amid the latest cost estimates, PSNH is now making its first pilgrimage to Wall Street since November. The environment for financing has deteriorated considerably with the cancellation of a number of nuclear plants nationwide.

Will PSNH get the money to continue?

''During the last 10 years, they've always been successful, sometimes to my surprise. I think 1984 could bring things into focus. The marketplace will make that determination,'' says Paul McQuade, chairman of New Hampshire's Public Utilities Commission, which oversees PSNH.

Mr. Luftig, Salomon Brothers utilities analyst, says, ''They're (PSNH) going to pay the price. Interest rates are up, their bond rating is down.''

''It won't be easy,'' adds Barry Abramson, senior utility analyst at Goldman Sachs & Co. ''The price of their stock has dropped a large amount in last four months.'' Because PSNH is doing its financing now, he says, ''The project will be more costly.''

Glossing over current financing difficulties, PSNH complains the arguments against the nuclear plant don't consider how high the cost of oil could rise.

''Nuclear power offers a long-term prospect of stable rates, which is something you don't have when you're dependent on fossil fuels, particularly oil ,'' says John Cavanaugh, a PSNH spokesman. ''Many opposition groups are focusing in on the short term. I think New Hampshire businesses are more concerned with the long term.''

If Seabrook is completed, its electricity will eventually cost consumers less than kilowatts generated from oil or coal plants, agrees Thomas Dillon, assistant secretary for nuclear energy at the federal Department of Energy. But ''it may be 10, or 12, or 15 years,'' Mr. Dillon said during a speech to New Hampshire's Business and Industry Association last week.

PSNH's Mr. Cavanaugh also points to the management change. This is the first month on the job for William B. Derrickson. PSNH has hired Mr. Derrickson, who was named ''Construction Man of the Year'' by Engineering News Record for setting an industry standard by completing a nuclear power plant in six years. The company is counting on his 14 years of nuclear construction experience to shave several million off the $9 billion figure.

Although PSNH might not agree with his reasons, Kirk Stone believes there is a positive side to the Seabrook situation.

From his tiny backroom office above the Merrimack County Savings Bank in Concord, N.H., he says, ''We don't have a $9 billion problem yet. We now have a

''We want people to start thinking about the problem and working on solutions. What are alternative energy sources? And what effect will rate shock have on property taxes? How will schools, town halls, libraries pay for the increased electric rates? What effect is this going to have on business in New Hampshire?'' says Mr. Stone, the only paid staff of the Campaign for Ratepayers Rights.

The group has been called ''informational terrorists'' by PSNH. Last week, the ratepayers group released a study which predicts 14,700 jobs will be lost by 1989 due to rate hikes to cover the cost of Seabrook. The study, by Union Associates of New York, figures higher electricity costs will stymie growth and force industry closings.

This being an election year in New Hampshire, the study is fodder for would-be governors. Democratic aspirant Chris Spirou is backing a move to call the state Legislature back into session to ''prevent the imposition of (Seabrook's) huge costs'' on consumers. Last week, 155 of the state's 224 towns considered the nonbinding warrant. At press time, an unofficial tally showed 47 favoring the warrant and 42 either rejecting, tabling, or amending it.

Aside from Seabrook's costs, the question of the plant's necessity has long been bantered about. Some consider conservation, paper-mill cogeneration, and local hydropower to be viable alternatives to each 1,150-megawatt Seabrook unit.

As if the debate over necessity and economics were not complex enough, another factor must now be tossed into the equation: Canadian electricity.

Just over a week ago, Vermont secured an agreement for 150 megawatts of power from Hydro-Quebec. It will supply roughly one-fifth of Vermont's electricity needs at three to four cents per kilowatt hour. (Seabrook electricity is estimated at 12 to 22 cents per kilowatt hour.) The deal is significant because it is the first time Hydro-Quebec has agreed to ''firm'' (around-the-clock) electricity.

This has been a long March for PSNH, and the trek is not over yet.

The next joint-owners meeting is March 30. The latest cost estimates have caused the utilities to take a hard look at Unit I, which PSNH says is 73 percent complete. But that figure is based on man-hours, not financing.

Approximately $2 billion has been spent on Unit I, and the cost to complete it is given as $4.4 billion. That means it is less than half finished, say critics. Some utilities believe the final cost will reach $6 billion. ''That would make it the most expensive nuclear plant in the world,'' says Foy.