Mayor Will Wynn: City should reject risky NRG nuclear offer
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
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
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.