June 29, 2009
Advocacy Group Finds CPS’ Reactor Cost Estimate Naïve; Ignores History and Independent Reports
Statement of Tom “Smitty” Smith, Director, Public Citizen’s Texas Office
CPS Energy’s announcement today that it will cost $13 billion to build two new nuclear reactors at the South Texas Project (STP) is a naïve guess when compared to independent assessments that offer more realistic estimates for financing and construction. San Antonio already has spent nearly $300 million just for an accounting of this project’s potential cost, but it appears that even that amount could not buy the city an accurate study.
Former Office of Public Utility Counsel Director Clarence Johnson and nuclear engineer and president of the Institute for Energy and Environmental Research Arjun Makhijani have estimated that costs will range from $17.5 billion to $22 billion.
Even Wall Street underwriters are pinning new reactors at a cost closer to what Johnson and Makhijani have estimated. Wall Street realizes the true potential cost and risk of nuclear power – which is why financial institutions refuse to invest in STP unless it is able to secure federally guaranteed loans. That way, if the project goes under or the costs balloon out of control, the only investors who will lose a significant amount of money are the American taxpayers.
Estimates like the one CPS made today are non-binding. If the reactors cost more than CPS has estimated, San Antonio taxpayers will pay the difference. If NRG Energy is unable to provide a fixed contract for this deal, CPS and San Antonio should ask why.
The City Council can stop all this madness and save San Antonio from a bad deal that will pass costs onto ratepayers for decades to come. Council members have questioned the project in the past and have expressed skepticism. The unfortunate truth is that there will be no way to know how much the expansion will cost until the plant is online. No one knows how much new reactors will ultimately cost to build, finance and operate.
City Council members have shown support for investment in energy efficiency and renewable energy. They have shown incredible vision supporting the Mission Verde plan to develop 250 megawatts of solar and new wind contracts. Just this May, the City Council voted to allow CPS to fund energy efficiency efforts, known as the Save for Tomorrow Energy Program. These are the sorts of measures that San Antonio should be supporting – measures that can be deployed quicker and at a fraction of the cost of nuclear expansion.
Now is the time for the City Council to bring common sense and practicality back to the table. San Antonio can’t afford another nuclear boondoggle; the City Council has the opportunity to say “no” to these new nuclear investments. Only it can protect San Antonians from bearing the overwhelming economic burden of building costly, dangerous and unnecessary nuclear reactors.