NRG: The new Brown and Root?
Thirty years ago, City Public Service, let Houston Light and Power select Brown and Root to be the architect, engineer, construction manager, constructor, and inspector for the South Texas Nuclear Project (STNP) Units 1 and 2.
That choice produced a huge cost overrun, regulatory violations, fines, and years of delay. As Brown and Root went over budget and fell behind, the pressure to finish the project grew. Workers started intimidating and even beating the safety inspectors who were trying to prevent substandard work.
Eventually, Brown and Root was fired. One lesson from that fiasco should have been to be careful in choosing a partner for a nuclear endeavor. In choosing NRG for STNP Units 3 and 4, CPS Energy demonstrated that they have not learned this fundamental lesson.
The Express-News on Wednesday, August 12, 2009 reported on a meeting with NRG representative Steve Winn.
During the meeting, Mr. Winn was asked about the differences in CPS Energy's projected $13 billion cost for STNP Units 3 and 4 and NRG's $10 billion estimate.
“We're in a different position” from CPS, Winn said. “CPS wants to be accurate with you.” Mr. Winn elaborated by stating: “We want Toshiba scared and to give us the lowest possible cost. For us, it's all about the contract.”
So according to Mr. Winn, CPS Energy has to be accurate in its estimates and NRG does not. In fact, NRG can misrepresent the projected costs to pressure Toshiba into a fixed price contract, so Toshiba will have to absorb the cost overruns that NRG is fairly sure will happen.
CPS Energy is caught between sabotaging NRG's contract strategy and telling the truth to the people of San Antonio. While NRG may claim that CPS is being accurate, there are other utilities that project a $20 to $25 billion cost for reactors similar to STNP 3 and 4. The more reasonable assumption is that CPS is also underestimating the nuclear costs, as well as other elements, to cooperate with NRG's strategy of deception and to sell the project to the City Council and the public.
More serious is that the NRG business strategy potentially puts Toshiba under cost pressures that create the same atmosphere that led to Brown and Root's management melt down thirty years ago.
Building a nuclear reactor requires the highest standards of honesty and accuracy. If NRG so easily misrepresents the truth for business purposes, they lack the corporate character to be involved in a nuclear power plant.
Then there is NRG's questionable financial condition. A recent report by the Moody's bond rating service graded NRG's bonds for the South Texas Project at "junk bond" level.
In addition, the success of wind generation at night is causing natural gas plants to be turned off. NRG is one of the utilities losing revenues because they are not selling gas generated electricity at night. Those losses add to the financial weakness of the company.
Such a company would be more likely to bring pressure to bear on its contractor to get the job done, rather than placing safety as the highest priority.
CPS Energy chose a partner that has already proven to be of questionable character and questionable financial strength. The partnership should end before more millions -- or billions -- go down the tube.
While we're in the business of sweeping up the cutting-room floor, here is an as-yet unpublished letter to the editor from the Sierra Club's Lloyd Cortez.
This letter responds to four CPS claims about STP waste in its Friday, August 14, letter, "Storage safe, on site."
CPS claims STP waste can be stored in casks on site indefinitely. Maybe, but that requires indefinite management, funding plans, including repackaging, and risks.
CPS claims the federal government has legal responsibility for permanent disposal of waste generated by the US commercial nuclear energy industry, last set to begin by 1998.
Yes, but since that failed and no site may be available for many decades, or perhaps ever, there is the legal and financial problem of who pays? Since 1998, the feds have been sued to pay management costs. Tricky negotiations may continue for years to determine who pays added costs, but it doesn't look good for taxpayers.
CPS claims the permanent waste site roadblock at Yucca Mountain was political. The real reasons are scientific: the site geology was unsound. But politics was behind the failure: decades ago political reasons focused on that one site, which backfired when pitted against decades of scientific scrutiny and political backlash.
CPS is right; US reprocessing of spent fuel ended in the 70s, but the 2006 budget allocated $50 million for a US plan. In January, 2007, the Bulletin of Atomic Scientists' Doomsday Clock advanced two minutes, to 5 minutes to midnight.
Reprocessing for fuel and other products is expanding around the world, including India, Korea, Iran, and Russia, which has increased nuclear proliferation risks. US Senate expert testimony claims the Global Nuclear Energy Program provisions actually increase risk from theft and terrorism.
Loyd Cortez, Chair
Alamo Group of the Sierra Club