CPS Takes Next Step on Nuclear Path

1/21/2009

Gschwartz
San Antonio Current Queblog

A pattern is starting to develop at the board meetings of CPS Energy. Spend two hours on self-congratulatory chatter and presentations about the company's so-called commitment to sustainability and renewable energy, and only then deliver a unanimous vote to move the company and San Antonio further along toward a financially and environmentally risky investment on increased nuclear power usage.

The CPS Energy board unanimously approved investing another $60 million for planning and engineering the expansion of the STP nuclear plant in Bay City yesterday, raising the company's financial commitment on the project up to $267 million. The vote authorized entering into an EPC Agreement (Engineering, Procurement and Construction) to replace the existing technical services agreement.

Mike Kotara, CPS Energy executive vice president of energy development, pointed out that the agreement does not lock the company into building the two additional proposed reactors at the STP site but that it protects the existing investment and enhances the opportunity for a Department of Energy Loan Guarantee.

"I can't understate the importance of this factor," said Kotara of the federal loan.

CPS officials have consistently argued that the utility's 40 percent ownership position in the STP nuclear plant has helped keep San Antonio's electric rates low. The South Texas Project currently provides 36 percent of the city's electricity.

Board Chair Aurora Geis also emphasized that the request for the additional $60 million was "not to build a nuclear power plant, but to advance nuclear processing, if you will, before we make a decision." The board agreed in November to delay that final decision until the fall of 2009, a decision which will require City Council approval. The board said the additional $60 million would be financed by restructuring of debt.

The way in which the board prefaced this new decision with so much environmental talk about their "Commitment to Sustainability" - much like the November board meeting - struck a disingenuous chord though. If pursuing more nuclear power is such a great move, then why not just come right out with it?

Mayor Phil Hardberger, previously silent about where he stands on the controversial plan, gave an endorsement that was in large part based upon the apparently pro-nuclear stance of Steven Chu, President Obama's pick for Secretary of Energy. "Nuclear power will be an important part of the energy mix," said Chu at his confirmation hearing earlier this month.

"My position on nuclear power has been to go as slow as possible and not invest anymore than we need to, to keep the nuclear option alive," said Hardberger. He noted that there had been uncertainty regarding the incoming Obama administration's policy on nuclear power but that his view on the matter was significantly impacted by Chu's comments. "It's very unlikely at that level he would be saying something President Obama disagreed with."

Chu also said a federal loan program to provide funding to build new nuclear power plants needs to be accelerated. Kotara's emphasis on that point seemed to indicate that this is perhaps the biggest factor in understanding why CPS seems so eager to increase nuclear investment, despite the continuing lack of a clear national plan on how to safely dispose of nuclear waste. Hardberger at least acknowledged that issue when he noted that Chu had made a point about putting substantial resources into developing such a plan. No one mentioned the fact that America has already been waiting roughly six decades for that plan.

Hardberger went on to say that he doesn't see nuclear power "as economically dangerous as it was a few days ago," and that "it's a good gamble at this point" for CPS to continue to move forward with this "incremental step."

"It seems a prudent thing to do at this time, unless you're absolutely decided against it," said Hardberger. The mayor did propose a resolution that the utility devote at least one-third of the money it spends on new nuclear projects to renewable energy investment, which was approved.

Trustee Derrick Howard acknowledged "vigorous debate" on the nuclear issue but agreed with Hardberger that he sees the comments from Chu as positive.

"Although this step is small, I certainly think this is the right step to take in keeping our options open," said Howard. He had earlier analogized talk of the company's sustainability plans with a quote from the Ridley Scott film Gladiator, saying "Your actions today will echo into eternity." San Antonio can only hope that the board's actions on its nuclear plans will not echo into eternity with infamy.

Geis stated for the record that there was a public comment from Karen Hadden, Executive Director of the SEED (Sustainable Energy and Economic Development) Coalition, though Geis failed to read it. The SEED Coalition, in conjunction with the Sierra Club and Public Citizen, sent out a press release this week pointing to a new study finding that new nuclear power investment is not economically competitive.

The report from power plant expert Craig Severance, "Business Risks and Costs of New Nuclear Power," states that "adding new nuclear power - with costs for generation alone that are 2 to 5 times total retail electric rates now in place - will have a dramatic upward effect on electricity rates." CPS Energy, by its own admission, stated numbers at its November board meeting showing that new nuclear power investment wouldn't save San Antonio consumers a dime on their electric bills for at least 32 years.

The report speaks further to the financial risks of nuclear power, noting that "if a utility chooses an option with significant risks of failure to meet its projected costs and timetable, severe consequences could ensue in the form of higher rates or, in the worst case, service interruptions."

"This report explains how utilities and the nuclear industry are underestimating nuclear costs," said Hadden in the release. "Texas utilities say that their responsibility is to provide affordable, reliable power, but nuclear power falls short on both counts."

Tom "Smitty" Smith, Director of Public Citizen's Texas office, takes umbrage in the press release with the nuclear industry's reliance on federal loan guarantees.

"Nuclear industry leaders have said no new nuclear power plants can be built without federal loan guarantees. It makes no sense to use taxpayer dollars to 'bail in' an industry which has relied for decades on subsidies and handouts. The nuclear industry is not economically viable on its own, much less competitive with other energy sources," said Smith.

Smith and Hadden both came down to San Antonio from Austin in December to promote renewable energy options along with David "Green Cowboy" Freeman, an energy expert who helped create the EPA, as well as serving as an energy adviser to President Jimmy Carter and as general manager of the Lower Colorado River Authority in Austin from 1986 to 1990. He is currently president of the Los Angeles Port Authority.

"We have all the renewable energy we need to ween ourselves from the three poisons [oil, coal, nuclear] and create a sustainable future for our planet," said Freeman during that visit. "The reason we aren't using more renewables is because Big Oil and the electric utilities have waged a slick campaign to deceive Americans."

"You have a cult out there, a religious cult, with a lot of scientists included... that feels we dropped the bomb and we've got to do something good with it [nuclear energy]," said Freeman on why nuclear power is still being pursued by utility companies.

"This stuff will die of its own weight, but the city of San Antonio could fail itself in the meantime," continued Freeman. "The business community in this town is still under the impression that the nuclear plants are giving low rates. But they're unaware of how much it will cost... this is economic suicide for San Antonio."

"The reason they're all looking at this is because they wanted to lure Toyota [with lowest electric rates]," added Smith. "But they won't [have lowest rates] if they build this plant.. it will result in a large increase and large cost overruns."

CPS Trustee Stephen Hennigan seemed to acknowledge some of these arguments when he said of the nuclear plan that the company's "biggest challenge is to sell this story."

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