City Council likely to pay consultant to look into nuclear plant expansion Austin buying into expansion unlikely, mayor says.

By Asher Price
Wednesday, December 17, 2008

Less than a year after the Austin City Council declined to invest in expanding a nuclear power plant in South Texas, it is close to wading back into a volatile political issue by paying a consultant nearly a quarter-million dollars to look at a more detailed version of the same proposal.

The City Council on Thursday could approve paying Houston consulting outfit WorleyParsons Group Inc. $241,125 to evaluate the offer from NRG South Texas LP to build additional generating units at the South Texas Project. The rehiring of the consultant is the latest chapter in Austin's cantankerous nuclear power history, which dates to the early 1970s.

Under the plan proposed last year by NRG, the Matagorda County plant would double in size from two to four reactors. In 2007, NRG told Austin, which owns a 16 percent stake in the nuclear power plant, that the expansion would cost about $6 billion and take seven to eight years to complete.

But in February, the Austin City Council decided to turn down NRG's invitation to invest in the plant expansion after the same Houston consulting company determined that the expansion's cost could be at least $1 billion more than estimated and take two years longer. In a memo, WorleyParsons, which had been hired in December 2007 for $205,625, called NRG's cost and timeline estimates "overly optimistic."

The more detailed proposal "proves them to be right," said Chris Kirksey, senior vice president for power production at Austin Energy. "There is an increase in cost and the schedule has slipped."

He said NRG's new proposal would cost at least a billion dollars more than the initial proposal and would take at least 15 months more to build. The final tally could be closer to $10 billion, with a completion date up to a decade away.

The city would have to decide whether to participate by Feb. 13 under the current proposal. In February, the Austin City Council said NRG's proposal lacked detailed information about the reactors, including timeline and cost estimates.

"They sent us a staggering amount of detail and, frankly, we simply don't have the resources to go through all the detail NRG has sent us," Mayor Will Wynn said, "and so WorleyParsons will help us do this."

He said the city will learn important information about how the new units will affect the ones it co-owns through the new study.

NRG spokesman David Knox says the offer, which is confidential, is the same as the earlier one, except that it adds more detail to the plant proposal on issues like cost, timeline and contractors.

He said that when the City Council declined to participate in February, it reserved the right to participate in the plant expansion later.

"We need to know as we get into a variety of things that have expenses, who our partners are going forward," Knox said. "We need to have finality on that decision."

The probability that Austin would commit to the expansion is remote, Wynn said.

"It's estimated to be so expensive that it's difficult to handicap the political and/or financial will to invest those kinds of dollars," he said.

The plant expansion comes at a time of robust activity in the nuclear power industry. Three companies have said they want to build at least eight more reactors in Texas. In 2007, the state Legislature approved multiyear tax subsidies for nuclear plants.

Meanwhile, Austin Energy projects that even factoring in the city's ambitious energy conservation goals, it will need to generate an additional 238 megawatts of power by 2020. The city-owned utility currently has at least 2,760 megawatts of power production capacity, 422 megawatts of which are supplied by the nuclear plant.

City voters narrowly approved a bond package to buy into the nuclear plant in 1973. At the time, the plant was estimated to cost $964 million, and the reactors were expected to open in 1980 and 1981. They ultimately opened in the late 1980s and cost $5.9 billion.

Environmentalists say issues including the mining of uranium and the disposal of radioactive waste remain unresolved.

But electricity from nuclear power plants tends to be cheap, and the plants have almost no emissions of greenhouse gases, which contribute to global warming. The South Texas Project also ranks among the country's safest and most efficient nuclear plants.

If the consulting payment will help the city learn more about the operations of the nuclear units it currently invests in, and the city is "protecting this asset as they would any other asset, then I'm not offended," said Paul Robbins , an Austin environmental activist and long-time opponent of nuclear power.

asherprice @; 445-3643

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