Building the Seabrook Station on the New Hampshire coast was a utility CEO’s nightmare. Nineteen bitter years of construction delays, cost overruns, lawsuits, regulatory sanctions, and headline-grabbing demonstrations passed before the 1,244-MW nuclear power plant started up in June 1990. And if that wasn’t bad enough, three of the original partners filed for bankruptcy: the principal owner and two electric co-ops with single-digit shares of the $6.6-billion project.
Public Service Company of New Hampshire’s 1988 failure was the first by an investor-owned utility since the Great Depression and one of the biggest in U.S. history up to that time. The numbers for the two co-ops—Eastern Maine Electric Cooperative and New Hampshire Electric Cooperative (NHEC)—were much smaller, but the institutional pain was no less severe.
Eastern Maine Electric pulled out of Seabrook and filed for bankruptcy in 1987—Vermont Electric Cooperative had pulled out a year earlier—but NHEC kept on suffering.
In 1988, NHEC defaulted on nearly $200 million in loans from the federal Rural Electrification Administration (REA) that had been used to prop up Seabrook. Then the co-op had to beat back an attempt by REA to sell the distribution system to a neighboring utility to clear the debt.
But the worst years of the Seabrook/ NHEC marriage were 1990 and 1991, when NHEC was at war with Northeast Utilities (NU), Seabrook’s new owner.
According to the June 1991 issue of
RE Magazine, the trouble started in the spring of 1990, when NU wouldn’t or couldn’t honor NHEC’s 10-year “sell-back” agreement, the coop’s protection from rate inflation. Under the agreement, NHEC didn’t have to take its 2.2 percent share of the nuke’s output if it didn’t like the wholesale rate.
When the co-op filed suit, claiming breach of contract, NU retaliated by threatening to drop NHEC as a wholesale customer. NHEC countered by opening power supply negotiations with New England Power, an NU rival, which publicly announced it would not let NHEC’s 65,000 consumers descend into darkness.
Next, NU filed for a 182 percent wholesale rate increase. NHEC calculated it would have to double its retail rates to pay for the increase and warned in a news release that it “would be devastating for the economy of the central part of the state, especially hurting a commercial sector already injured by the slump in the economy.”
General Manager Jon Bellgowan believed that NU was trying to wear him and his co-op down. “They’re greedy. They’re interested in expansion. They want to drive us into bankruptcy and acquire us.”
State Representative Mary Chambers echoed his suspicion. She told
RE: “I see [the co-op] ultimately just collapsing and Northeast taking over. I think Northeast always intended for that to happen.”
The Democratic legislator faulted NHEC for naively thinking NU would honor the sell-back agreement the co-op had signed with Public Service Company of New Hampshire. But she wanted to help NHEC if she could.
State Senate President Ed Dupont, a Republican, was sympathetic too, but he couldn’t see a political path forward. It was a lose-lose situation: Rates for other New Hampshire consumers would probably go up if NHEC sold back its share of Seabrook’s output, but rates for NHEC consumers would surely go up if it did not. And it was clear to him that in New England’s glutted power market, NHEC could easily find cheaper power.
“Seabrook was a bad idea, from Day One,” Dupont said.
Chambers concurred: “There was nothing about it that was right.”
Bellgowan still believed in nuclear power and that Seabrook was a good addition to the regional grid. But he was beginning to see why the nuclear plant brought out into the open such strong feelings—even those of Gary McCool, the leader of the co-op membership’s anti-Seabrook activists, who had warned years before that Seabrook could be the co-op’s financial undoing.
“I wish we’d paid a little more attention to him,” Bellgowan admitted. “A co-op is made of people like that.
“This co-op would be one of the healthiest distribution cooperatives in the country if it hadn’t been for the investment in Seabrook.”
On May 6, 1991, after the
RE Magazine article had been prepared for publication, NHEC filed for bankruptcy. The co-op emerged from the court’s protection a year and a half later, but without Bellgowan and his power supply manager, who were forced to resign. Also, the court required that NHEC drop its sell-back suit.
Today, New Hampshire Electric Cooperative has an A+ credit rating and is known for its progressive management and technical innovation. Based in Plymouth, it serves about 80,000 consumers in the central part of the state.
Next Era Energy Resources and more than a dozen municipal utilities, all in Massachusetts, now own the Seabrook Station. Next Era describes the plant as a “low-cost producer of electricity.”