December 8, 2009

San Antonio Express-News Editorial Board

E-mails between Toshiba Inc. and CPS Energy and also among CPS executives make clear that the utility knowingly understated the costs of nuclear expansion to the public. Over a period of months during which CPS officials were telling the public the price for expansion at the South Texas Project was $13 billion, executives knew Toshiba was projecting the cost to be at least $4 billion higher.

The same e-mails demonstrate anxiety among CPS officials that NRG Energy – a publicly held corporation that is CPS’s partner in the project – intended to reveal the inflated cost estimates. "I think your discussion of incomplete cost estimates in public in November is a major problem," the CPS vice president of power plant construction wrote to an NRG official.

That e-mail was sent on Oct. 22. City Council was set to vote on $400 million in additional financing for the project on Oct. 29. Yet according to an investigation led by the CPS internal auditor, a longtime employee, no one at CPS – not even the vice president of nuclear development who also served as secretary for the board of trustees – acted with malicious intent.

Incomprehensibly, the CPS board last week passed a resolution that endorsed this finding.

The determination by an insider investigation that there was no malicious intent may strain some legal definition designed to avert criminal prosecution. But it is completely unacceptable for a municipally owned utility that is struggling to retain – let alone regain – credibility.

CPS Energy is in crisis. That crisis is not going unnoticed by the investment services that rate CPS bond issues.

Unclipped, its impact will be felt by ratepayers.

The only way to resolve this crisis and put CPS back on a path to credibility is for an independent external arbiter to conduct a complete investigation of CPS organization and practices. That includes the size and composition of the board of trustees, a review of the technical procedures used to produce cost estimates for nuclear and non-nuclear sources of energy, and an audit of the annual payment of 14 percent of revenues that CPS is supposed to make to the City of San Antonio.

The time for hedging and secrecy has passed. A thorough accounting at CPS is urgently required. Mayor Julián Castro, the only member of the CPS board of trustees who is accountable to the public, and Jelynne LeBlanc-Burley, who was elevated by the board to lead the troubled utility, should accept no less.