Whoops: the WPPSS Collapse and Its Legacy

Whoops was a derogatory nickname for the Washington Public Power Supply System (WPPSS), a public power consortium that experienced one of the largest municipal finance failures in U.S. history. The nickname reflected widespread criticism after the organization’s ambitious nuclear program collapsed amid cost overruns, construction problems, legal rulings, and a massive bond default.

Key takeaways

• “Whoops” referred to WPPSS, which financed several nuclear plants in the 1970s–80s.
• WPPSS defaulted on $2.25 billion in municipal bonds in 1983 — then the largest municipal default ever.
• Construction delays, cost overruns, mid-project regulatory changes, and a court ruling that voided take-or-pay contracts caused the collapse.
• The organization was renamed Energy Northwest in 1999; the nickname is now antiquated.

Background

In the 1950s WPPSS was formed to coordinate power generation for the Pacific Northwest. During the 1960s and 1970s, nuclear power was widely promoted as an efficient solution to growing electricity demand. WPPSS planned and financed five nuclear plants by issuing municipal bonds, intending plant revenues to repay those bonds.

What went wrong

Several factors converged to derail the program:
* Project management failures and contractor problems produced delays and cost overruns from the start — the Packwood Lake Dam project was seven months late, an early warning sign.
Mid-construction changes to Nuclear Regulatory Commission (NRC) safety rules forced redesigns and rebuilt work, increasing costs further.
Bond sales and projected power revenues fell short as public opinion shifted against nuclear power and some municipalities withdrew support.
* “Take-or-pay” arrangements (agreements obligating utilities to buy the power or pay anyway) that backed much of the bond financing were later ruled void by the Washington State Supreme Court. That decision removed a key financial guarantee.

The default and aftermath

In 1983 WPPSS defaulted on $2.25 billion of municipal bonds, the largest municipal default at that time. By then only one of the five plants was near completion; another plant eventually came online in 1984, but too late to prevent investor losses. Estimates suggested more than $24 billion would have been required to complete all projects.

A settlement reached on December 24, 1988, totaled $753 million. Recoveries varied widely: some of roughly 75,000 bondholders received about $0.40 per dollar invested, while others received as little as $0.10 per dollar.

WPPSS reorganized and in 1999 changed its name to Energy Northwest. The term “Whoops” largely fell out of use, remaining a historical epithet tied to the financial collapse and its lessons.

Lessons and significance

The WPPSS collapse highlights several enduring lessons for public infrastructure financing:
* Relying heavily on future project revenues to secure long-term debt is risky if projects face delays or shifting public sentiment.
Robust project management, realistic cost estimates, and contingency planning are essential for large-scale construction, especially nuclear plants with evolving safety standards.
Legal and contract structures (such as take-or-pay guarantees) can be decisive; their enforceability must be clear.
* Large municipal defaults can have broad, long-lasting impacts on bondholders and public trust in publicly financed projects.

Sources

• U.S. Department of Energy — Regional Issue Identification and Assessment (RIIA)
• State of Washington Energy Facility Site Evaluation Council — Columbia Generating Station
• HistoryLink — Washington Public Power Supply System (WPPSS)
• Bonneville Power Administration — Energy Northwest, WA