Once a steady-as-you-go industry, America's investor-owned electric utilities - especially those with nuclear power plants under construction - today are being battered by financial problems.
Nearing the fifth anniversary of the highly publicized accident at Three Mile Island, nuclear power now has h a stigma attached to it - and is so heavily regulated - that it seems unlikely any new nuclear plants will be built in the United States in the foreseeable future.
Public protests against nuclear power have taken their toll. But it is the decreasing credit-worthiness of utilities and the fact that investment capital is drying up that are combining to foreclose nuclear power's future in the US.
''It is pretty clear,'' says Douglas Bedell of General Public Utilities Corporation, of Parsippany, N.J., operator of the Three Mile Island Plant, ''that the aftermath of Three Mile Island (March 28, 1979) has included deeper regulatory scrutiny of nuclear technology. It's been necessary, but it has added to costs.''
Though the public-safety issue remains of prime importance, the key concern today is the financial stability of utilities that are building nuclear power plants. Six of the nation's leading utility companies have experienced problems recently, creating a ''domino effect'' in the nuclear-utility industry, says Gerald D. Morgan, utilities analyst of the Prudential-Bache brokerage firm.
In recent weeks, Moody's Investor Service and Standard & Poor's have lowered the credit rating of many utilities. Such downgrading has been a trend for the past decade, but it appears to be accelerating. As a result, a number of utilities are having to abandon internal and public financing and turn to high-interest bank loans to carry on their construction.
''For those that have nuclear plants under construction,'' says William Muzyka, senior industry analyst for the Value Line Investment Survey, ''the cost of money is getting much higher. A larger and larger percentage of their capital may have to go to banks.''
Others are following a more questionable path. They borrow money in order to pay dividends on common stock, masking their cash-flow problems in order to attract investors. Because banks charge higher interest rates, in either case customers eventually will foot the bill through higher costs for electricity.
When utility companies rushed into nuclear-power construction programs during the energy-crisis atmosphere of the early '70s, they did not count on the continuing delays in construction they would encounter. These delays, which caused huge cost overruns, came about in part because of a proliferation of regulations following Three Mile Island and in part due to the vexingly complex nature of nuclear engineering.
At the same time, demand for electricity leveled off in the US. With an overabundance of electricity, utilities had no place to sell their expensive, new nuclear-generated product.
Last summer's bond default by Washington Public Power Supply System was a harbinger of widespread trouble in the utility industry. In the past month, a string of financial setbacks have hit utilities.
The latest development came Tuesday, when Philadelphia Electric Company decided to suspend work for 18 months on one of the two nuclear reactors in its Limerick nuclear project. Mr. Morgan of Prudential-Bache points out the postponement came just two days after Philadelphia Electric declared a stock dividend. A cash-flow analysis he performed on Philadelphia Electric, he says, indicates it was in no position issue a payout to investors.
''I scratched my head when I heard about the dividend, then I waited a day or two, and I read that the Limerick unit was being postponed,'' Morgan says. ''Many (utility company) managements are using whatever methods they can now to mask their problems to enhance their ability to go for public finance. Many of them borrow money to raise dividends in order to shore up (investor) confidence.''
But perhaps most troubling to the utility industry was the Nuclear Regulatory Commission's denial last week of an operating license to Commonwealth Edison Company's $3.35 billion Byron nuclear reactor near Rockford, Ill. Analysts expect the utility to get a license eventually, but not without expensive delays and more inspections. Commonwealth Edison has great expertise in the nuclear field, having seven atomic plants on line.
Says Morgan: ''No one is safe if Commonwealth Edison is attacked. They are a top-quality utility.''
Other beleaguered utilities: Public Service Company of Indiana, which announced Jan. 16 it would not finish its Marble Hill nuclear project into which it already has sunk $2.5 billion; Long Island Lighting, which has run into community and political opposition to the opening of its Shoreham plant; Cincinnati Gas & Electric (CG&E) and its partners have decided to convert its nearly completed Zimmer nuclear plant to coal.
Morgan considers CG&E's coal conversion proposal a bookkeeping ploy to enable it to keep its ''allowance for funds in construction'' and thus make it more attractive to investors.
Despite these problems, however, Richard P. Braatz, vice-president of finance for the Edison Electric Institute (an industry interest group), points out that of the 200 investor-owned electric utility companies in the country, most are carrying on with business as usual.
Eighty nuclear plants are in operation, he says, ''quietly making money,'' and producing 13 percent of the nation's electricity. Fifty-five are under construction, and only a handful have had problems.
Even though there is currently a surfeit of electricity, Mr. Braatz and his colleague, Paul Turner, vice-president of the Atomic Industrial Forum, argue that the US still must consider nuclear power a fuel for future use, especially if economic recovery causes demand to grow. No new nuclear or coal power plants have been ordered since the late '70s, and ''as a practical matter,'' Braatz admits, ''unless there is a change of cost and regulatory environment, there will be no new nuclear power plants in the foreseeable future.''