Mayor tells CPS to rethink nuke options

8/06/09

By Tracy Idell Hamilton
San Antonio Express-News

CPS Energy officials said Wednesday the utility will explore options shy of a 40 percent investment in two new nuclear reactors after Mayor Julián Castro expressed strong reservations with that option.

"I am not comfortable with the original proposal," he said during an Express-News Editorial Board meeting, at which he was joined by CPS CEO Milton Lee and interim General Manager Steve Bartley. "Some folks feel like this is a done deal, somehow. That is not true - there is nothing done about this deal. CPS is - has already - and is pursuing other options, both within nuclear and outside of nuclear."

After the mayor laid out his concerns with both the deal and the public process, Lee said the utility was hearing similar apprehensions from the public.

"We are, like the mayor said, looking and will continue to look at other options," Lee said. And while he acknowledged the 40 percent option is the utility's "professional recommendation," Lee said CPS would continue to talk to its partner, NRG Energy, about other possibilities.

Bartley said the utility has been listening to residents' concerns as it has traveled to each council district, pitching its proposal and taking public comment.

"We are getting very, very good input from the community and we are listening," he said. "We are as concerned with managing the costs of this project as anyone, and the options we are looking at are designed to alleviate some of the concerns we're hearing."

Also at the meeting was new District 8 City Councilman Reed Williams, who has taken the nuclear question seriously enough to have hired a staffer devoted solely to studying the deal.

Williams, a retired oil industry executive, said his overarching concern is that the city and CPS minimize its exposure to risk.

While he emphasized he's still looking at the numbers, Williams said in a previous interview his sense is that if the assumptions used by CPS move "even a little bit, the decision changes."

Details were vague about what the other options might look like, but Lee and Bartley acknowledged that becoming a minority partner, perhaps at 20 percent, is an option.

Talks are ongoing, Bartley said.

How those alternatives would affect ratepayers' bills also is unclear. The projected 5 percent rate increase every other year for the next decade already assumed CPS would sell half the power it generated from a 40 percent share on the wholesale market in the form of long-term contracts.

Steve Winn, CEO of NINA, the nuclear development arm of NRG in partnership with Toshiba, the contractor to build 3 and 4, said Wednesday afternoon that the company hoped CPS would remain a partner in the third and fourth reactor, at whatever percentage makes sense for the utility and the city that owns it.

"CPS has been a good partner in 1 and 2," Winn said, "and we appreciate them as a partner in 3 and 4, but a nuclear project is not insignificant, so (CPS and San Antonio) need to be a partner at a level that meets their need." NRG has the wherewithal to do most or all of the project on its own, Winn said, but its preference is to have partners.

Castro said he would be comfortable if CPS held on to a smaller investment in 3 and 4, and emphasized that in general, he is comfortable with nuclear power. He said he would wait to see what percentage makes the most sense for the city. "I don't want to draw a hard line."

Castro said he was uncomfortable with the 40 percent option because it includes the risk of selling that additional energy on the open market, a move that goes beyond the utility's core mission, and he worries about the renewable energy opportunities that might be lost if the city, which owns CPS, invests such a great amount in nuclear. Castro also expressed concern with the way the public process has been handled by CPS to date.

"We need to make this as transparent as possible, within the confines of a business deal," he said. "And the public process up to now, I believe, is not what the public expected."

CPS officials have acknowledged the criticism, and have shortened their presentation to allow more time for comments and questions. And at this week's meetings in Districts 2 and 7, officials answered each question as it came up, rather than holding them all to the end, when many people at previous meetings had drifted away.

The District 7 meeting also included Cris Eugster, CPS' chief sustainability officer, to answer questions about the utility's commitment to renewable energy and conservation.

That may have been a direct response to the efforts of Energia Mia, a newly formed coalition of anti-nuclear activists that held its first news conference and rally before Wednesday's District 7 meeting.

About 50 members of the group, most sporting T-shirts with anti-nuclear slogans, attended the rally, alternatively speaking against nuclear energy and chanting, "No rate hikes - no nuclear!"

Castro will host his own meeting Monday night in City Council chambers. CPS will give a five-minute opening statement before diving into questions it has been given in advance, which Castro said was done so CPS would be prepared to answer every question.

"This is not a soliloquy or a talking down to," Castro said. "This is an engagement with the community. We want folks and the council to substantively get the information they need, and also to believe, at the end of the day - and justifiably believe - that they have had a role in the process."

Staff Writer Anton Caputo contributed to this report.

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