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Mayor Will Wynn: City should reject risky NRG nuclear offer

Friday, February 8, 2008 by Austin Monitor

In an interview Friday morning, Austin Mayor Will Wynn said he would recommend to his City Council colleagues that they reject an offer by NRG Energy that Austin participate in construction and operation of two 1350 megawatt nuclear units at the South Texas Nuclear Project (STP).


NRG estimated the construction only cost of the plant at $6 billion and total permitting and construction time of seven to eight years. Austin Energy’s staff, their consulting firm and the Mayor found those figures to be “overly optimistic.”


The Mayor said his decision was not based on politics but on the financial risk associated with such a venture. “Based purely on a business risk assessment . . . I will suggest that Austin doesn’t agree to essentially buy 432 MW…our 16 percent share of the 2700 they’ve proposed at whatever cost it will be, knowing that even with what I would characterize as NRG’s overly optimistic estimate, it would still be a billion dollars for us,” Wynn said.


Wynn pointed out that Austin Energy is continuing to analyze its fuel mix. “It’s just an ongoing process when you have a big utility like that.”


The Mayor released a memo from Austin Energy Interim General Manager Roger Duncan, which states,  “Austin Energy has completed its review and has determined the projected costs of the new units and their permitting and construction schedules are overly optimistic and include an unacceptable degree of uncertainty and risk for a commitment of this size. The additional cost to construct the project could be in excess of $1 billion and take more than two years longer than estimated by NRG.”


The memo, which was sent to City Manager Toby Futrell as well as the Mayor and City Council, concludes, “Austin Energy believes it would be imprudent for the city to take on such risks.”


City staff has posted an agenda item for next Thursday allowing the Council to make a decision on the NRG offer. NRG sent a letter in early December requiring Austin to make a decision within 90 days on whether it would participate in a third and fourth unit at STP.


“Well in advance of that posting, Austin Energy has hired a very appropriate consulting firm, Worley Parsons. They’ve been in the nuclear power business for 40 years,” said Wynn.  The company has constructed and operated numerous nuclear facilities. “They are a very appropriate company to help us think through a risk analysis for this. But all they could do, all Austin Energy could do, is work through what is relatively schematic information in that letter.”


In addition, the Mayor pointed out, “We’re about to kick off an unprecedented community discussion … sort of an Envision Central Texas exercise about the future of Austin Energy, specifically its fuel mix. Nuclear is going to have to be part of that conversation and I think that takes us 12 or 15 months.”


Council Members Jennifer Kim and Lee Leffingwell have already indicated that they would oppose expanding Austin’s participation in STP.

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