Archive for the ‘News’ Category

December 15, 2009

Greg Harman
San Antonio Current QueBlog

Over the past few weeks, CPS Energy staffers have been finalizing some new figures on how much energy San Antonio will need and when. And, for anyone who has even casually been following the recent scandals at the City-owned utility, it comes as no surprise that they are significantly different from those trotted out again and again over the summer to support a nuclear solution.

Recently departed General Manager Steve Bartley and other staff members had been warning the community of a power shortfall coming in 2020, one that required the rapid expansion of the South Texas Project nuclear project outside Bay City. The expansion was to take a decade to license and build, and would gobble up, at a 40-percent ownership stake, $5.2 billion of our dollars.

However, in the first redraft of CPS’ Strategic Energy Plan since the spring, Chief Sustainability Officer Chris Eugster told the CPS Board of Trustees on Monday that a new source of power generation wouldn’t be needed until 2023 – that the amount of energy needed has dropped roughly by half.

"It’s really has given us another three years to make that decision," said Eugster. "We are going to seriously have to rethink our generation capacity over the long run."

Also, the power needed in the 2020s won’t be "baseload" power that runs all the time, like nuclear or coal. Instead, gas-fired peaking units that can be cut on and off quickly better suit the need of 2023. Natural gas is a great complement to renewables like wind and solar, as a current cover story in Solar Today, "Texas: The Next Solar Superpower?" points out.

Because of solar’s variability, many grid managers and utility operators expect that new solar installations will need auxiliary natural gas-fired capacity to function as backup firming power, with estimates varying anywhere from 0.5 to 1 MW of natural gas required for every 1 MW of solar power. In this regard, Texas is well ahead of the rest of the country. Over recent decades, Texas has installed a significant capacity of natural gas generators for baseload and peaking power.

…

Much of the natural gas capacity in Texas is underutilized, making it available to provide firming power when solar and wind resources are not available. Developers can then concentrate on building solar farms without also having to build natural gas plants.

However, in a strange twist of data, the reassessment also suggests nuclear expansion is still a better investment than natural gas, by a hair. Eugster said the City would still be able to afford the STP expansion if the ovenight costs were as high as $13.9 billion. That’s without financing. Previous estimates have suggested financing would tack another $3 billion on the total figure.

[In a conversation today, Eugster said natural gas would likely cost in the "upper eights" or around 8.8-cents per kilowatt hour, while nuclear power would be in the "lower eights," 8.2, 8.3-cents per kilowatt hour. "So it’s pretty close," he said, while stressing again that placing a price target on nuclear and natural gas is extremely challenging.]

But the heart of the message was decidedly not pro-nuclear.

"There are issues with the nuclear expansion that we had a hard time modeling," Eugster said. "One is the uncertainty of cost and the future escalation. I mean, what will the final cost of the nuclear plant be? There’s no way for us to model that.

"The expansion timeline is also not well aligned with when this city really needs this additional power. The plant comes online before our projected need. And increasingly, it looks like the lock-in to the long lead-time for the nuclear expansion may prevent capitalizing on new technology or pricing breakthroughs in renewables or energy storage."

CPS has been selling the city the nuclear expansion suggesting it would cost $13 billion with financing, a figure the local environmental community has dismissed from the get-go, placing the figure closer to $17 billion, and later suggesting it could climb to $23 billion.

A new cost estimate from Toshiba, which had been operating by a figure $4 billion higher than the city’s mantra of $10 billion, is due by year’s end. CPS is expected to present the City Council two paths forward – one nuclear, one non-nuclear – in January.

One of the key points of Eugster’s presentation was the value of the time the city has gained before any expensive, involved decision must be made.

"The fact that we can wait five-plus years before a next generation plant is required would allow us to evaluate developments of the renewables, the energy storage, and evaluate the performance of [efficiency]. And the gas option, it’s not a decision we have to make today, it would be a good back-up if renewables or energy efficiency or energy storage don’t play out as quickly as people are saying."

Or, as he told the Current this afternoon: "With nuclear, we’ve got to go now, we’ve got to spend this huge amount of capital which there’s some unknowns about right now. Whereas with the gas option, we’ve got time to wait, and the value of that time to wait is hard to quantify. It’s like you got an option value on a house. There’s some value there to that. You can check it out, you can see if you like it, and you can go ahead and purchase it, and you can walk away."

So it feels an awful lot like the happy ending where we walk away together and follow the decentralized energy strategies CPS officials had been considering putting on ice to make way for nuclear’s cost.

Beyond nuclear, we can gussy up our "smart" grid and advanced metering systems, get our weatherization and renewable energy rebates on steroids, and keep those solar and wind pitches coming from a rapidly developing, pollution-free, low-carbon industry.

Is it too terribly unjournalistic to say "yippee"?

—

Oh, and someone requested we post the CPS investigation report to the Board of Trustees: Here’s the leaked draft version; here’s the sanitized version.

Happy reading!

Despite its own scientists’ objections, state regulators are greenlighting a massive nuclear waste dump in West Texas.

April 04, 2009

Forrest Wilder
Texas Observer

In February, hundreds of government regulators and businesspeople gathered in Phoenix for "Waste Management ’08," the annual radioactive waste industry confab. Amid the swag and schmoozing, industry insiders appraised the state of their business. The good news: The nuclear industry appears to be rebounding in the United States, providing potentially huge new radioactive waste streams as planned reactors come online. The bad news: The number of landfills for burying low-level radioactive waste is dwindling. One of the oldest sites, in Barnwell, South Carolina, will close to all but a handful of states on July 1. That will leave 36 states, including Texas, with no place to send the radioactive waste generated by their nuclear power plants, universities, hospitals, and companies.

Since 1980, when the federal government delegated to the states the task of dealing with low-level radioactive waste, not a single new landfill has opened. Ten attempts have been made by states to develop one. The congressional Government Accountability Office estimates that the failed efforts in developing sites cost a combined $1 billion.

The industry largely blames public opposition. "We just didn’t get kicked out of South Carolina," said Steve Creamer, CEO of Utah-based EnergySolutions Inc., the company that runs Barnwell. "We got brutalized and kicked out of South Carolina."

Creamer estimated that the United States’ 104 commercial nuclear reactors would generate 117 million cubic feet of waste over their collective lifetimes. Federal nuclear facilities under decommissioning orders will produce millions more. Where will it all go?

A subsidiary of Dallas-based conglomerate Valhi Inc., Waste Control Specialists LLC was in Phoenix to make the case that it was on the verge of doing what no other company has been able to do-license and build a massive radioactive waste landfill.

"Considering our political support, considering our local support, if a new facility cannot be licensed in Texas, it probably can’t be licensed anywhere," said Bill Dornsife, a Waste Control vice president.

By early 2010, Waste Control officials told the conference-goers, the company hopes to begin disposing federal and state radioactive waste at two adjacent Texas landfills in Andrews County. All the company lacks are two final licenses from the Texas Commission on Environmental Quality. One, known informally as the "byproduct license," would authorize the disposal of 3,776 canisters of radioactive waste from a closed, Cold War-era processing plant in Fernald, Ohio, as well as mill tailings from the Texas uranium mining industry. TCEQ has issued a draft license for the byproduct dump.

The second license would allow the company to bury low-level radioactive waste from federal and state sources, including nuclear reactors, weapons programs, and hospitals. With both licenses, Waste Control could bury more than 60 million cubic feet of waste over the span of 30 years, more than half the volume of the new Dallas Cowboys stadium.

If Waste Control can repel legal challenges by environmental organizations and secure final approval from TCEQ for the second license, its remote site in Andrews County would become the repository for commercial nuclear waste from Texas, and also Vermont as part of a "compact" between the two states. A loophole in state law, however, allows the state compact commission, an oversight board appointed by Gov. Rick Perry, to contract with other states and compacts for waste disposal. "For political reasons, we don’t want anyone to come knocking on the door until we get this up and operating, but I think there are some capabilities there," Dornsife told his Phoenix audience.

Federal radioactive waste, mostly the leftovers from the U.S. government’s atomic weapons program, is the most lucrative of the waste streams contemplated by the company. In 2003, as part of Waste Control-backed state legislation that authorized privatized radioactive waste disposal in Texas, the Legislature granted companies like Waste Control the right to dispose of Cold War-era federal waste as well as waste generated by states.

"[W]e just had to get the state law changed," said Rod Baltzer, Waste Control president, at the conference. It probably didn’t hurt that Dallas billionaire Harold Simmons owns Waste Control through Valhi. Simmons is one of top campaign contributors to the state’s Republican leadership.
The new landfills would join Waste Control’s expanding waste portfolio, all of which are clustered on the company’s 1,338-acre site in Andrews County, near the New Mexico state line. The company’s radioactive waste treatment and storage plant opened in 1997. The license for that facility is "very unique," Dornsife said, because it allows for "unlimited storage time, and we could go to unlimited [radio]activity."

There’s also the hazardous waste landfill. Half of that dump is actually filled with radioactive waste, material the state has deemed "exempt" from radioactive disposal standards. The company’s efforts to broaden the exemptions are ongoing. "[D]isposing of radioactive material at [hazardous waste] pricing is extremely cost-effective," Dornsife said.

In their conference presentations, Baltzer and Dornsife failed to mention the problems the company has encountered with worker exposure to radiation. And while Baltzer admitted that the licensing process has been "brutal," he didn’t detail the rift it has created within TCEQ between scientists and engineers, who stridently object to Waste Control’s plans, and agency upper management that wants to approve the licenses.

In March 2005, Waste Control began processing radioactive waste from the Rocky Flats plant, a site in Colorado that manufactured plutonium triggers for the United States’ Cold War-era hydrogen bomb program. On June 2, 2005, while processing this waste, a worker known in state documents as Number 67 at Waste Control’s mixed waste facility was wounded on his leg by a piece of contaminated metal. The company tested the worker’s urine and feces, and found elevated levels of two plutonium isotopes, as well as americium-241. Later in June, an independent expert determined that the worker had probably inhaled the radionuclides. Over the next few months, as processing of the Rocky Flats waste continued, the investigation expanded to include eight of Number 67’s co-workers. All but one tested positive for low levels of radionuclides, including one employee who hadn’t worked at the mixed waste facility for three years. On September 22, Waste Control management decided to suspend operations at the mixed waste facility and expand the testing to virtually all employees.

In all, 43 individuals had been exposed to plutonium and americium, company testing showed, according to documents uncovered by the Observer. According to Waste Control, a ventilation system wasn’t working properly, allowing plutonium and americium particles to escape into the lunchroom and adjacent hallways.

Waste Control maintains that the radiation exposures were not dangerous. The highest calculated dosage to any employee was "less than 10 percent of the regulatory limits," according to a January 2008 Waste Control report. "We did find a handful of employees that were over our planned exposures; they were below regulatory concern," said company president Baltzer in an interview with the Observer. "We are very fastidious about applying ALARA-as low as reasonably achievable-principles. … We did note that we had some ways to improve our program. Partially as a result of this, we changed out our general manager … We think some of the employees were not as thorough in their conduct, in their operations, as they should have been."

A TCEQ audit of the company’s incident report questioned Waste Control’s dosage calculations and its handling of the situation. Waste Control officials assert that the workers were exposed to plutonium and americium-241 over a six-month period covering the summer of 2005. In contrast, the TCEQ audit, completed in spring 2007, posits that the exposures "might have been going on since 2002, at least intermittently at a minimum." The audit suggests that the company underestimated the number of batches of radioactive waste that were processed. If that were the case, the actual doses might be much higher than company reports indicate.

The audit notes that a preliminary review by John Poston Sr., a professor of nuclear engineering at Texas A&M, "suggested WCS employee doses were … seven times greater than the WCS-assigned employee doses, but still below regulatory [limits]." The agency has declined to release Poston’s complete findings.

The TCEQ audit also criticized Waste Control for waiting months to suspend operations after it learned employees had been exposed. "It is my opinion that WCS management did not act in a timely manner in their decision to suspend operations until the source of the intakes could be identified," wrote Sheila Meyers, a TCEQ chemist who authored the audit report. Baltzer said the company began testing workers as soon as possible, and temporarily closed the facility once conclusive lab results were received.

The radioactive contaminations were in large part preventable, the audit noted. Waste Control acknowledged in a report on the incident that testing employee fecal samples could have caught the exposures sooner. That failure to test may be partly the fault of state regulators. In 2003, the Department of State Health Services dropped a requirement that Waste Control test employees’ feces annually for the presence of radionuclides. Instead, the analysis could be "performed at the discretion of the [company’s] radiation safety officer."

Four male workers tested positive for radionuclides in 2007, according to TCEQ documents. One employee told inspectors in an August 2007 interview that "the air vents at the mixed waste treatment facility had not been fixed completely."

In August 2007, Susan Jablonski, the head of TCEQ’s radioactive materials division, provided her boss, Deputy Director Dan Eden, with a written update on the review of Waste Control’s two license applications. In the memo, which is stamped "confidential," she identified "radiation protection" as one of four major outstanding problem areas. "The radiation protection issues appear not to be under control at the larger site," she wrote. "The apparent loss of control of radioactive materials also impacts the ability to establish true background [radiation] at the site." Background, or natural radiation, is necessary as a baseline so that leaks can be detected.

TCEQ would not make Jablonski available for an interview. The agency did not respond to written questions before the Observer went to press.

The TCEQ hasn’t issued any violation notices to Waste Control for the radiation exposures.

There have been other accidents involving radioactive material at Waste Control’s facilities. In October 2005, two state inspectors visited the site in Andrews to investigate a string of contamination events, including the worker exposures. Their report notes three other "cross-contamination" incidents that had occurred in as many years: one involving tritium; one involving radon gas; and a leakage of americium-241 and plutonium-239 into a septic system. This string of problems "reflects either defects in ventilation scheme or inadequate administrative controls to prevent cross contamination of facilities," the inspectors wrote.

Recently, Waste Control agreed to pay $151,000 in fines to TCEQ for contaminating septic systems on two occasions, and for elevated levels of heavy metals such as arsenic, lead, and mercury at a railcar unloading area.

So far, the accidents have not derailed the company’s activities. Yet stiff resistance from TCEQ personnel in charge of reviewing Waste Control’s proposals has put the company on the defensive. One of the company’s fiercest critics, Glenn Lewis was brought on at the TCEQ’s radioactive materials division to manage any controversies concerning the application. He quickly soured on the process. "It was obvious from the beginning that the enabling legislation was written for the benefit of, and largely by, this applicant," Lewis said. "That raised immediate concerns about how objective a review of the application could possibly be." In December, Lewis left TCEQ after serving 25 years in Texas state government.

In all, three former TCEQ employees who worked on the Waste Control license applications said they left the agency because of frustration with the licensing process. All three came to the conclusion, after years of working on the applications, that Waste Control’s site is fundamentally flawed. "After years of reviewing the application, I submitted my professional judgment that the WCS site was unsuitable," said Patricia Bobeck, a hydrogeologist who worked on the byproduct application. "Agency management ignored my conclusions and those of other professional staff, and instead promoted issuance of the licenses."

Encarnación "Chon" Serna, Jr. an engineer, said he quit in June 2007 when it became apparent that a license for the low-level radioactive waste landfill would be issued despite staff objections. At the end of the staff’s technical review in August 2006, Serna and other staff members decided the application was "very, very deficient" and couldn’t be approved. Nonetheless, TCEQ mangers decided to move forward, giving the company until May 2007 to address some problem areas. "Around that time I started getting the idea that these people are going to license this thing no matter what," said Serna. "I felt that in clear conscience I couldn’t grant a license with what was being proposed."

Serna said that when he left, there were still "thousands of questions in every area of review." For example, he had trouble determining accurate calculations of radiation doses workers might expect to receive when handling soil-like "bulk waste." In 2006, Serna wrote in an internal e-mail that he’d come across 57 scenarios in Waste Control’s plan in which workers would be close to radioactive waste. "I think there could be potential exposures to significant doses of radioactivity," he wrote.

His overarching concern, shared by the other former staffers, relates to the site’s physical location. Serna said he is convinced that the geology of the site is unsuitable for containment of radioactive waste for thousands of years.

That view was echoed in an August 14 memo prepared by two TCEQ engineers and two agency geologists. The proximity of a water table to the disposal site "makes groundwater intrusion into the disposal units highly likely," the four wrote. Their memo stated that "natural site conditions cannot be improved through special license conditions" and recommended denial of the license. The next day, Susan Jablonski conveyed those concerns to Deputy Director Dan Eden, who reports directly to Executive Director Glenn Shankle. Waste Control "states the second water table is no closer than 14 feet from the bottom of the low-level landfill," read her memo to Eden, which is stamped "confidential." A staff analysis, she wrote, "shows that the water table may be closer than 14 feet."

Company president Baltzer told the Observer that the former staffers’ fears are outdated and overblown. Once Waste Control heard that staff had lingering concerns about the groundwater situation, the company began drilling new boreholes and wells to verify that water wasn’t present in or near the landfill. Waste Control has spent $3 million on the drilling and found no water, Baltzer said. "WCS’s license application demonstrates that the site will protect human health and the environment and that water will not intrude into the proposed disposal units under any credible scenario," he said.

In September, the two TCEQ teams working on Waste Control’s applications gathered to rehearse a presentation they would be giving Executive Director Shankle later that day. "The entire gist was to communicate the impossibility of licensing either facility," said Lewis, who resigned in December. "As we were adjourning, [Deputy Director] Dan Eden remarked to [TCEQ attorney Stephanie Bergeron Perdue], ‘We have to find a way to issue a byproduct license.’ This was after an hour-long presentation on why it would be unwise to issue a license for either the byproduct or low-level application."

As staff opposition grew, Waste Control took its case to the agency’s upper management. Lobbyist and attorney Pam Giblin, who represents Waste Control, met with Shankle once in September and twice in November, according to agency records. Baltzer left nine messages for Shankle and four for Eden between July 2007 and January 2008, according to phone logs that reflect only missed calls. Eden met with Waste Control officials at least five times during that period. Former Republican Congressman Kent Hance, a Waste Control investor and chancellor of the Texas Tech University System, paid a visit to Shankle’s office in early November. Cliff Johnson, a principal in Textilis Strategies, an Austin-based firm that lobbies for Waste Control, visited with Shankle in September. Shankle also met with Giblin, Baltzer, and Mike Woodward, a Waste Control lobbyist and attorney with Hance’s law firm, during that period.

The TCEQ higher-ups were in a bind: Their own technical experts had unequivocally recommended denial, and two members of the team had left in disgust. Yet the agency’s managers still wanted to push the licenses forward.

"In late October, Susan Jablonski acknowledged in writing to senior management in the agency that faulty site conditions exist and that they cannot be corrected through license conditions," said Lewis, the former staffer. "What is baffling is that Ms. Jablonski-at the same time acknowledging the inherent impossibility of correcting a bad application-still pledged to support whatever nonsensical recommendation her boss may decide to pursue."

By late October, Waste Control had a draft license in hand for its byproduct dump. TCEQ Executive Director Shankle had chosen to deal with his staff’s objections by adding stipulations to Waste Control’s licenses, including a requirement that the company conduct further studies on erosion, groundwater, and possible fractures. In March, he rebuffed the Sierra Club’s call to rescind the license. A draft license for the low-level landfill is currently being written.

Is West Texas’ water supply at risk of radioactive contamination?

June 12, 2009

Forrest Wilder
The Texas Observer

In 2007, geologists for the Texas Commission on Environmental Quality told their bosses that a proposal for a radioactive waste dump in West Texas was fatally flawed because of the landfill’s proximity to the Ogallala and Dockum aquifers. Then-agency head Glenn Shankle (now a lobbyist for the dump’s owner, Waste Control Specialists) overruled his employees, issuing licenses for the two adjacent landfills in Andrews County. But as a compromise of sorts, he required Waste Control to conduct a number of tests and studies to prove that the site was dry enough.

Critics, including three whistleblowers who quit the agency in protest, were hardly mollified-in a sane world, they said, the company would have to prove that the dump wouldn’t leak radioactive waste into the groundwater before getting a permit, not after. But that’s all the TCEQ bosses were offering.

Now, some of the results from those studies are in. They are hardly reassuring. Waste Control, owned by Dallas billionaire Harold Simmons, has identified nine areas inside and near the proposed landfills where groundwater is present. The company has argued to the TCEQ in recent filings that these so-called "pockets of groundwater" are isolated from the aquifers and not a cause for concern. Some of them, the company says, are probably linked to playas-surface depressions, common to West Texas, that fill with water. Others, Waste Control contends, result from small depressions in the top of the red bed clay. The playas will be filled in with soil, the company promises, and the depressions in the clay are too small to matter.

Even so, the presence of any water is troubling. "If you have water in the ground you shouldn’t put a landfill there," says Patricia Bobeck, a hydrogeologist who left the TCEQ in September 2007 and went public with her complaints that upper management had ignored the environmental and safety risks. Water can provide a pathway for radioactive particles to move quickly through the earth and permanently contaminate drinking or agricultural water.

Bobeck says the latest findings only underscore what she and other experts have been saying for years. "The people who rejected this site were not acting on a hunch," she says. "WCS has corroborated that with their own data."

In the past year, Waste Control, at the TCEQ’s request, has drilled dozens of new wells. Many of them, including some within the footprint of the radioactive waste dump, have inches or feet of water at the bottom.

"These wells indicate that the area around the byproduct excavation and southeastern portion of the low level site are much wetter than previously thought," wrote Conrad Kuharic, a TCEQ geologist, in a February memo.

In its license application, Waste Control had argued that the landfills would be well away from a "dry line," a shifting boundary on a map dividing wet wells from dry. But in April, confronted with the evidence from its own wells, the company conceded that that critical line had moved 200 feet closer, almost inside the landfills. Increased rainfall in the future may put the "dry line" inside the dump, TCEQ experts have contended.

That, Bobeck says, is "bad news. This landfill by law cannot be placed in proximity with water."

For years, Waste Control has touted its 1,300-acre dump site as nearly geologically perfect for containing radioactive waste for tens of thousands of years. The company’s primary selling point has been what it calls the "almost impenetrable red bed clay" in which the waste will be buried.

But the red bed is leaking. After giant earthmovers dug deep into it, water began seeping out of the walls. On the southern wall, enough seeped out to form a pool of standing water. In December, the company claimed that the water would soon dissipate. But when a trio of TCEQ geologists visited Waste Control’s dump in January, a month and a half later, they noted that the puddle had actually grown (see photo above).

Bobeck is skeptical that the discovery of groundwater in the radioactive waste dump will prompt the TCEQ to crack down. The additional studies, she says, were never intended to change Waste Control’s course.

Not surprisingly, the company agrees. "Groundwater occurrences in the vicinity of the Byproduct landfill have no impact on current planning for the operation of the landfill," the company told the TCEQ in May.

Investigative reporting for this article was supported, in part, by a grant from the Open Society Institute.

December 6, 2009

By Tracy Idell Hamilton and Anton Caputo
San Antonio Express-News

CPS Energy’s partner in the nuclear deal quietly tipped off Mayor Julián Castro in late October that the project could be significantly more expensive than the utility’s public pronouncements.

NRG Energy said last week it did so to try to limit the damage it feared could occur to the nuclear project when a higher estimate came out at an analysts’ meeting in November.

By then, the City Council already would have voted to spend $400 million on a deal that could cost billions more than it was told.

The leak, the source of which has remained secret until now, touched off a cascade of events that damaged the credibility of the utility, led to high-level executive resignations at CPS Energy and heavy pressure on two trustees to resign and put the nuclear deal on life support.

Details of the debacle are said to be spelled out in the report of an internal investigation into why the higher cost estimate was kept from the CPS Energy board and the City Council. The final version of that report will be turned over to the board Monday, but it’s unclear when the public will see it.

In the report’s absence, rumors have cropped up – and even were alluded to in the CPS Energy board room – that NRG was trying to scare San Antonio out of the deal by making the higher cost estimate public and that Castro, who sits on the five-member CPS board, aided in the effort by meeting with NRG privately.

How the report will portray the mayor’s actions is unknown, but Castro said the persistent whispers prompted him to address the matter Friday by divulging the source of his information and his contacts with NRG.

"Rumors that … my office has done something untoward are completely inaccurate," Castro said, adding that if the report isn’t released publicly Monday, he will release the section that addressed his role himself.

At issue is why NRG tipped off the mayor’s office while CPS executives were keeping knowledge of contractor Toshiba Inc.’s higher cost estimates from their own board.

"We wanted to make sure the mayor’s office knew what was happening before the analysts," NRG spokesman David Knox said Friday.

Not telling the board

NRG did that through Frank Burney, a longtime City Hall lobbyist and attorney who represents NRG in San Antonio. Burney, who supported Castro in his mayoral bid this year, alerted Castro’s office in late October that CPS Energy’s cost estimate was significantly lower than Toshiba’s.

Knox said NRG officials already had told the CPS nuclear team that Toshiba’s number would be shared at the upcoming analysts’ meeting Nov. 19, which would be reported by the media.

At that meeting, NRG officials said Toshiba’s latest estimated price was $12.3 billion, which put it $4 billion above what CPS had figured in its estimate.

Castro confirmed Knox’s account, saying the internal investigation report includes e-mail from NRG that suggests CPS Energy should share the higher figure with its board since it likely would be made public.

Burney urged Castro’s chief of staff, Robbie Greenblum, to ask CPS interim General Manager Steve Bartley about the higher cost estimate. Later that evening, at the Oct. 26 board meeting, Greenblum did so.

Bartley acknowledged a significant gap between Toshiba and CPS’ estimates, but still he didn’t share it with the board.

The next day, the San Antonio Express-News received a tip from a different source that Toshiba’s cost estimate was as much as $4 billion more than the number CPS had been using publicly. Within hours, the mayor announced the City Council would delay its vote, scheduled just two days later, on borrowing $400 million.

Bartley never publicly acknowledged a specific estimate amount.

Since the summer, CPS had been telling the public that the nuclear project would cost $13 billion, making it the most cost-effective way to meet San Antonio’s future energy needs.

Bartley, who resigned Nov. 25, contended the higher estimate just was a negotiating ploy by Toshiba and didn’t need to be shared with the board, a view the mayor’s office disputes.

"It was material information," Greenblum said Friday. "Whether they thought they could get the number down or not, this was material."

Board member Stephen Hennigan, one of two trustees Castro wants off the board, has said he’s suspicious of NRG’s motives, noting that the for-profit energy giant’s interests may not align with CPS’.

Last month, Hennigan grilled CPS executives at a board meeting over how they could trust their partners in the nuclear deal.

The complicated web of corporate interests, he said, puts CPS in the position of cooperating with NRG to persuade Toshiba to bring its price down, while, at the same time, NRG and Toshiba are partners in a company called Nuclear Innovation North America, which technically owns NRG’s stake in the nuclear project.

"As a board member, is it my job to be skeptical of the actions of a so-called partner," Hennigan said Saturday. "And I am skeptical of their intentions."

Hennigan, who has declined to step down, wants the report made public as soon as possible. His comments, coupled with Castro’s attempts to push him and board Chairwoman Aurora Geis out, have fueled speculation that the mayor had inappropriate meetings with NRG — and the report apparently says as much.

Castro, who says CPS needs fresh board leadership to foster a new era of transparency at the utility, dismissed the notion.

He said that as mayor, it was his job to meet CPS’ partner, which he did twice. Castro, who took office in June, described them as meet-and-greet-type meetings, not negotiations. Cost estimates weren’t discussed, he said.

He also acknowledged a phone call to NRG CEO David Crane after the higher figure had been made public.

Too big to ignore

When he finally did learn of Toshiba’s cost estimate, Castro said the $4 billion gap was too much for a public official to ignore.

"However you come around to it, this was information we needed to know to make a policy decision," he said.

Hennigan said he agrees with the mayor’s reaction to NRG’s tip, but wouldn’t comment on the meetings between the mayor and NRG.

"It makes complete sense," he said, "how the mayor had to deal with the situation because of a failure of CPS management team to communicate with the board."

Castro said that had the board gotten the information in the summer, when Toshiba first gave it to CPS, or even in mid-October, when an e-mail with the higher figure was sent to executives, "we could have perhaps managed it in a way to continue going forward."

Knox, too, dismissed the idea that NRG leaked the figure to Castro to get CPS Energy out of the deal.

"If this was going to have a bad impact on the deal, (having San Antonio learn about the higher costs from the analysts’ meeting) was going to be worse," he said.

Knox did acknowledge NRG made an effort to cultivate a relationship with the mayor’s office. It was clear, he said, that Castro’s support would be pivotal to the success of the nuclear deal.

NRG long has said it can build the two nuclear reactors at the South Texas Project in Bay City with or without CPS, though it prefers to remain partners.

More than CPS Energy’s participation, though, Knox said, what NRG really needs is stability, "and this is not something that is helping the stability of the project."

Whether NRG will have to pursue its nuclear ambitions without CPS’ help won’t be known until January. That’s when CPS is supposed to take the latest estimate from Toshiba, add its own costs and come out with a new public cost estimate for San Antonio’s participation.

At that time, the utility’s board and the City Council will decide whether San Antonio stays in the deal. If not, it will likely have to find buyers for its half of the ownership.

December 6, 2009

San Antonio Express-News

CPS Energy’s longest-serving board trustee, Steve Hennigan, hasn’t actually given me a copy of his nine-page "not so far-fetched theory document," but we spoke at length Friday night and Saturday afternoon about what’s in it as he fights to keep his board seat and remain a major player at the municipal utility.

"I’m not a conspiracy theorist," said Hennigan, a credit union executive by day and an unmistakably nice man.

Conspiracy theory, nevertheless, is making the rounds these days in one of those "truth stranger than fiction" scenarios as business and civic leaders ask what went wrong with a multibillion-dollar plan to expand the South Texas Project nuclear facility, the source of 30 percent of the city’s current energy usage.

The finger-pointing has now turned outward. Hennigan and others say CPS’ merchant power partner, NRG Energy, engineered a complex sequence of events that undermined years of CPS work to convince the City Council and ratepayers of San Antonio that nuclear expansion was the best path to energy security.

Others think the plotline is simpler: CPS executives were caught in their own web of deceit after withholding information from elected officials, the media and the public that showed nuclear expansion could cost $4 billion more than advertised by the utility.

Hennigan has watched this deal unfold from the very beginning, so give him his due: Maybe his "theory document" will prove convincing in time and even become a big-screen thriller.

Someone call Oliver Stone. George Clooney, too. We’ll need a paranoid Hollywood director and a great actor: a shrewd, well-connected lawyer who convinces us that NRG undermined its own partner, the one with the coveted bond rating and the guaranteed ratepayer base and cash flow.

I might wait for Netflix. If you think of the weekend as a bathroom break, the next big scenes unfold Monday, when the CPS board meets. CPS board meetings, of course, are top secret, and you and I lack proper clearance. But this one could include the forced resignation of board Chairwoman Aurora Geis (Julia Roberts?), and the board will receive the much-anticipated investigative report into CPS executives who covered up the troubling $4 billion differential.

The real-life character in this drama is Frank Burney, a familiar and well-regarded San Antonio lawyer and lobbyist, a strong supporter of Mayor Julián Castro hired by NRG to represent it before the city. Burney, acting on authority from NRG, tipped Castro’s staff to Toshiba’s real price tag for nuclear expansion after his client grew perplexed with CPS’ continued failure to come clean.

Far from conspiring to undermine CPS, the NRG team worried that a "keep going" $400 million bond vote by the City Council, followed by tardy disclosure of the real cost, would send the project into a political tailspin.

That’s happened anyway. And that’s where the conspiracy theorists come in.

Whodunits are always entertaining. You can choose to watch the movie, or you can opt for reality, which is simple: Burney acted in the interest of the mayor he supports and ratepayers who simply can’t afford nuclear expansion a la Toshiba.

It’s a reality that’s far less intriguing than the fictionalized treatment, but that’s life, isn’t it? And that’s why we have the movies, to distract us from our real-world burdens.

Robert Rivard is the editor of the Express-News. E-mail him at rrivard(at)express-news.net. Or follow him on Twitter at @editorrivard.