Nuclear project’s price tag continues to soar

The City of Austin’s decision not to participate in the expansion of the South Texas Project nuclear plant is looking better and better. On Tuesday, San Antonio’s mayor and City Council were in the unenviable position of telling the public that the price on two planned nuclear reactors had ballooned by as much as $4 billion — to an estimated $17 billion.

The Austin City Council rejected participation in the NRG Energy project last February based on anticipated costs.

On Tuesday afternoon, the San Antonio Express-News reported that the San Antonio City Council would postpone until at least January a vote on $400 million in bonds to continue financing expansion of the plant. CPS Energy has already spent about $280 million on planning and engineering for the project.

In a press release Tuesday, the Austin-based SEED Coalition (Sustainable Energy & Economic Development) said basically, “We told you so,” noting that their expert had pegged the cost of the project at $12-17.5 billion a year and a half ago.

Mayor Julián Castro told the Express-News that he and the rest of the council might not have found out about the cost surge but for the direct questioning of CPS Interim General Manager Steve Bartley by one of the mayor’s aides. Bartley said he plans to go to Japan to negotiate with reactor maker Toshiba and that the extra cost is “a negotiating position.”

The estimate in 2007 was $5.4 billion. CPS Energy, San Antonio’s city-owned energy utility, currently is a half partner in the proposed nuclear units, but its board recently decided to limit CPS Energy’s stake in the two new units to between 20 and 25 percent, meaning CPS Energy and its partner, NRG Energy of New Jersey, will have to find at least one more partner.

Units 1 and 2 of the nuclear plant were the focus of ongoing controversy, particularly in Austin in the 1980s, in part due to rising costs. Those two units were estimated to cost less than $1 billion but ended up costing almost six times that much. Both CPS Energy and Austin continue to be part owners of units 1 and 2. Austin has a 16 percent share and was offered the chance to participate at that level in units 3 and 4.

When Austin rejected that option, the city released a memo that stated, “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.”

Now, it appears that cost would have been closer to $2.7 billion if the $17 billion price tag were correct.