Archive for the ‘CPS’ Category

February 15, 2010

By Robert Alvarez
CommonDreams.org

When President Obama rolled out his proposed budget to Congress for the coming year, he said it would build "on the largest investment in clean energy in history." But Obama’s definition of "clean energy" includes a commitment to help companies garner billions of dollars in loans for nuclear reactor construction. And, unfortunately, nuclear energy isn’t safe or clean and it’s too costly for the nation.

The government’s role in the energy marketplace is clear in its loan-guarantee programs. This year, the Energy Department proposes to provide $166 billion in federal energy loan guarantees to aid the ailing auto industry and help finance nuclear, coal, and renewable energy projects. Sadly, the nuclear industry is slated to get the largest–and riskiest–share of that support.

Wall Street has refused to finance nuclear power for more than 30 years, rendering new construction impossible. The Obama administration, in a move to placate Senate Republicans, proposes to fund new power reactors with some $54.5 billion in federal loan guarantees. Because of the way the guarantees are structured, the actual loans will be made by the Federal Financing Bank out of the U.S. Treasury. Last year, the Government Accountability Office estimated that these loans have more than a 50-50 chance of failing. Because of skyrocketing costs, these loans might pay for five reactors–and merely expand the nation’s electrical supply by less than 1 percent.

Meanwhile, the Obama administration is moving to terminate funds for the Yucca Mountain nuclear waste disposal site in Nevada. After nearly 30 years of trying, disposal of high-level radioactive waste is proving to be extremely difficult, so Obama has convened a "blue ribbon" panel of experts to recommend what to do with it. The accumulation of spent power-reactor fuel poses new safety issues, which will be the reality for several decades to come. Spent fuel pools–which currently contain about four times what their original designs envisioned­are more vulnerable to terrorist attacks than reactors.

In 2004, a National Academy of Sciences panel concluded that drainage of water from a spent fuel pond by an act of malice could lead to a catastrophic radiological fire. A year earlier, my colleagues and I pointed out these risks could be greatly reduced by putting most of the spent reactor fuel into dry, hardened concrete and steel containers–as nations like Germany have already done.

Meanwhile, despite Obama’s rhetoric about reshaping America’s energy future, he’s asking for a budget that would have the Energy Department continue to spend 10 times more on nuclear weapons than energy conservation.

Even with economic stimulus funding, the department’s actual energy functions comprise only 15 percent of its total budget and continue to take a backseat to propping up the nations’ large and antiquated nuclear weapons infrastructure. In fact, the Energy Department’s proposed budget for the 2011 fiscal year, minus stimulus money, looks a whole lot like it did in the Bush administration, and as it has during several presidents’ tenures.

More than 65 percent of our energy budget covers military nuclear activities and the cleanup of weapons sites. Its single largest expenditure maintains some 9,200 intact nuclear warheads. Even though the department hasn’t built a new nuclear weapon for 20 years, its weapons complex is spending at rates comparable to that during the height of the nuclear arms race in the 1950s.

There’s currently a 15-year backlog of discarded nuclear warheads. Yet, Obama’s proposed budget would halve spending on weapons dismantlement over the next five years. The physical elimination of nuclear weapons continues to have a low priority in Obama administration because it competes for funds to build a new weapons production complex–a "holy grail" of the nuclear weapons establishment.

The Energy Department faces a brave new world in which, for the first time, it is being called on to employ millions of Americans to create a new energy future for the United States. It doesn’t appear that the Obama administration will meet this challenge. Instead, more of the nation’s tapped-out treasure is going for costly nuclear power, and nuclear weapons we don’t need and could never use.

Robert Alvarez, an Institute for Policy Studies senior scholar, served as senior policy adviser to the Energy Department’s secretary and deputy assistant secretary for national security and the environment from 1993 to 1999.
www.ips-dc.org

February 15, 2010

Citibank ranks nukes potential ‘corporate killers,’ but CPS still wants a taste

Greg Harman
San Antonio Current Queblog

Thursday morning, San Antonio Council members are expected to vote on increasing electric and gas rates for CPS customers. Though the 6.5- percent and 7.5-percent increases – the first of an anticipated decade of rate hikes the utility says it needs to keep up with capital development projects and the area’s growth – do not include future payments for the expansion of STP nuclear complex.

It’s no wonder some San Antonio residents nearly messed themselves when a small-town newspaper editor published a story suggesting San Antonio was about to recommit itself to the planned expansion of the South Texas Project nuclear complex. It turns out that when
cover-ups over increased cost estimates were souring the public here in San Anto, none other than Citibank was warning off potential investors in the United Kingdom.

In a starkly titled financial assessment, "New Nuclear – The Economics Say No,’ Citibank reps suggested in November that any number of hurdles to construction of new plants represented "corporate killers." Though the clarion call followed just announced commitments to new nukes in the UK, it could now be applied in the United States. President Obama said earlier this month he hopes to pony up $54 billion in federal loan guarantees to kick off a new wave of nuke construction.

Daniel Weiss cites San Antonio’s sticker-shock experience – and the lack of Wall Street enthusiasm – as he picks apart Obama’s move for Climate Progress.

Julio Godoy at the Inter Press Service (reposted by Infoshop News) writes:

The enormous technical and financial risks involved in the construction and operation of new nuclear power plants make them prohibitive for private investors, rebutting the thesis of a renaissance in nuclear energy, say several independent European studies.

The risks include high construction costs, likely long delays in building, extended periods of depreciation of equipment inherent to the construction and operation of new power plants and the lack of guarantees for prices of electricity.

Adding to these is the global meltdown and the consequent cautious behaviour of investors as also fiscal and revenue difficulties of governments in the industrialised countries, say the studies.

In the most recent analysis on the feasibility of new nuclear power plants, the Citibank group concludes that some of "the risks faced by developers … are so large and variable that individually they could each bring even the largest utility company to its knees financially."

Citibank concludes these enormous challenges will result in soaring costs. It’s the same position local opponents of the STP expansion have been making for two years, though they are rarely credited for their foresight by the elected leadership or in local media.

While some jumped when they read an error-choked Bay City Tribune article predicting a San Antonio "resolution backing STP Units 3 & 4 – possibly within the next few days," they needn’t have. The current Mayor and Council have all but washed their hands of the expansion. However, there is a lingering residue – an irrepressible hope to gain a share in the project in return for the millions CPS has already spent – that could keep the City in thrall to the planned new units for years to come.

A better plan, suggests Karen Hadden, director of the SEED Coalition: "They should get out. They should get out clean right now." Take the money and run.

SEED was key to bringing some of the earliest numbers that suggested the nuke expansion would be far above the $5 billion, as NRG first suggested.

Now with the project about to break down, the state of Texas is showing its hand as an interested party for the first time. Public Utility Commission Chairman Barry Smitherman (with Governor Perry’s "full support") sat the squabbling CPS Energy interim GM and NRG Energy CEO down for a four-hour talk last week. More meetings are expected.

CPS wants to withdraw from the planned two-reactor expansion at Bay City but still benefit from a share of ownership commensurate with the value of its land and water rights at the site and the $350 million already paid in. A district judge ruled recently that CPS should be compensated if it withdraws and suggested the two get back to the bargaining table.

But where was the state and Smitherman during all those months the SA community was being sold on the project with fictitious numbers?

When talk turns to rate hikes, Hadden says CPS is just not ready.

"They haven’t fixed the problems at CPS Energy. They haven’t gotten better accountability. They haven’t done an outside independent investigation. They don’t have a line-item proposal. They haven’t withdrawn from the nuke," she said.

Without stricter oversight, CPS could potentially take the rate-hike cash and turn around under a more receptive Council and reengage with the STP project, Hadden suggested. "This is a backdoor for nukes."

(Citibank’s full report is below.)

February 4, 2010

By TOM FOWLER
Houston Chronicle

Unit 1 of the South Texas Project nuclear power plant remained off line Thursday as workers tried to determine why one of the 57 control rods used in the unit failed to operate properly.

The problem was discovered Wednesday afternoon as crews conducted a monthly control rod test and surveillance procedure, South Texas Project spokesman Buddy Eller said. He wouldn’t specify the exact nature of the problem but said another control rod had what appeared to be a similar problem last month during the same test.

Operators decided to shut down the unit Wednesday night to evaluate the problem, Eller said.

Unit 1 was last shut down in October 2009 for a routine refueling, when some of the spent uranium fuel rods are removed and replaced.

The reactor’s vessel head was replaced then as well, for the first time since the unit started up in 1988. Eller wouldn’t speculate as to whether the control rod problems were related to the new equipment.

The plant’s two reactors produce 2,700 megawatts of power, enough for about 2 million homes, the company estimates.

tom.fowler(at)chron.com

Jan 29, 2010

Reuters News

HOUSTON, Jan 29 (Reuters) – NRG Energy Inc (NRG.N) CEO David Crane said on Friday the company would not pursue construction of two nuclear reactors in Texas if the project loses a federal loan guarantee due to a dispute with partner CPS Energy.

A Texas state judge on Friday ruled CPS may withdraw its financial support from the $10 billion project, but cannot expect to retain its 50 percent ownership stake, according to a court transcript.

"If you want to be in the play, you have to pay, or you can’t stay," Judge Larry Noll said. "You will eventually lose your equity share."

The judge directed the parties to negotiate a settlement addressing project ownership and withdrawal.

The dispute could be the second setback for new nuclear reactors in the United States, after FPL Group Inc (FPL.N) said this month it would halt billions of dollars in capital expenditures, including reevaluating development of two new reactors, after getting a negative rate case ruling.

In December, CPS, a municipal utility owned by San Antonio, sued NRG for $32 billion, alleging NRG misled utility officials on the estimated cost of the reactors, among other things.

CPS is a 50-50 partner with Nuclear Innovation North America, a partnership between NRG and Toshiba Corp (6502.T), to build the two reactors in South Texas. The utility has spent more than $300 million on the nuclear expansion project.

Before the judge’s ruling Friday, Crane told analysts and investors in a conference call that suspending the project could cause NRG to take a pretax write-off of $400 million.

Even with Friday’s ruling, prospects for construction of South Texas Project units 3 and 4 remain uncertain should CPS withdraw completely from the project.

Crane said the nuclear project remains economically viable. "So long as there is a real possibility that we can secure a federal loan guarantee, we will continue to exert every effort to resolve the dispute with CPS fairly and in a timely manner," Crane said.

NRG, however, will not move forward "unless we see a clear path forward to success," Crane said.

NRG spokesman Dave Knox said Friday’s ruling "gives CPS clarity on their rights if they withdraw."

If the parties can negotiate a settlement, "we can get that clear path to success," Knox said.

CPS officials agreed that the ruling helped define the utility’s rights. "Now we want an equitable solution at the negotiating table," said Jelynne LeBlanc-Burley, acting general manager of CPS Energy, in a statement.

Crane said before the CPS dispute, he thought the South Texas project was among front runners to get "the all-critical" federal loan guarantee. But now, Crane said, he did not believe the Department of Energy would risk any of the $18.5 billion loan guarantee fund on a troubled project.

CPS and NRG each applied for a loan guarantee for their respective shares of the project.

"We have reason to believe that the DOE sees a fierce dispute between the equal partners … as an extremely high obstacle to them committing a loan to the project," Crane told investors.

(Reporting by Scott DiSavino and Eileen O’Grady; Editing by David Gregorio)

January 30, 2010

By ELIZABETH SOUDER
esouder(at)dallasnews.com
The Dallas Morning News

Texas’ prospects for leading the nuclear power renaissance turned bleak Friday.

The chief executive of NRG Energy, Texas’ second-largest power generator, said he’s willing to drop plans to build two new reactors in South Texas if the company cannot come to a favorable agreement with San Antonio utility CPS Energy.

A court ruling on Friday could allow the partners to continue to negotiate, but after months of soap-opera intrigue, rumors and finger-pointing between the companies, it’s unclear whether they can work together.

NRG could find itself scrambling for another investor and hoping to find one in time to win federal loan guarantees that could be handed out any day. The lack of an investor or loan guarantee would kill the nukes.

"We absolutely will not agree to any resolution that we cannot afford," NRG chief executive David Crane said on a conference call with analysts. "We will not throw good money after bad."

The project isn’t dead yet. Crane said Tokyo Electric Power Co. is interested in buying a stake in the expansion. Other investors could be found.

But anti-nuke activists were already dancing on the South Texas Project’s grave.

"We may be witnessing the early throes of a nuclear project death!" Karen Hadden, director of the Sustainable Energy and Economic Development Coalition, wrote in an e-mail Friday to members.

In 2005, shortly after NRG bought a 44 percent stake in the South Texas Project, executives saw a "once-in-a-lifetime opportunity" to expand, Crane said. With the federal government offering loan guarantees for new reactor projects, Crane said NRG, with some partners, could afford to build them.

But both investment partners and loan guarantees are critical.

"I think that the idea that anyone would take the full risk of developing a new nuclear project, totally on their balance sheet, is a foolish thing to do, even if you have a balance sheet as big as Exxon Mobil’s," Crane said.

The South Texas Project already has two reactors. NRG operates the plant and owns 44 percent, CPS owns 40 percent, and Austin Energy owns 16 percent.

In October 2007, NRG and CPS signed a deal to jointly build two new reactors. Austin chose not to invest in an expansion.

Meanwhile, NRG officials have been negotiating with equipment makers and construction and engineering firms to set the price of the project and to share the risk.

By last autumn, NRG said, its contractors were offering around $12.1 billion, and NRG executives felt confident they could squeeze that below $10 billion.

That’s higher than NRG’s earlier estimate of $8.6 billion. The price difference led to concern among San Antonio officials, who began to wonder whether CPS could exit the deal.

"We at NRG did not appreciate that CPS signed the deal, commenced funding … without ever obtaining the City Council’s endorsement of the deal," NRG’s Crane said.

CPS sued NRG and asked the court to rule on whether CPS would retain its investment in the project if it stopped financing the expansion.

State District Judge Larry Noll in San Antonio ruled on Friday that a party may stop participating in the project and still retain the equity stake it had contributed.

That was a favorable ruling for San Antonio, after NRG stated the city would lose its investment if it walked.

But the judge issued a warning to the city: "If you want to be in the play, you have to pay or you can’t stay. You will eventually lose your equity share."

CPS spokeswoman Theresa Cortez said the company hasn’t decided if it will exit the project. Staff still must recommend to the board whether to invest in the deal, and the board must bring the recommendation to the City Council.

But NRG chief executive Crane said it will be hard to continue working with CPS.

"When you develop a project like this, you have to be able to look the person in the eyes and on some level trust them. That just doesn’t seem to exist right now," he said.

He said if NRG shuts down the project, it will take a $400 million charge.

And the legal dispute between CPS and NRG isn’t over. CPS has also sued NRG for $32 billion, which includes the value of the South Texas Plan property and punitive damages.