May 2008 study on $$ of nuclear plant in TX

[kristopher]

For the bananas file; available for download online:

Assessing Nuclear Plant Capital Costs for the Two Proposed NRG
Reactors at the South Texas Project Site

Arjun Makhijani, Ph.D.1

March 24, 2008

1. Main Findings

Careful industry analysis of new nuclear power plant costs indicates that the NRG
estimate of $6 billion to $7 billion for the cost of the two new nuclear units proposed to
be built at the South Texas Project site is obsolete and likely incomplete. The best
currently available analyses indicate that it is a serious underestimate of the capital costs
of the project.

An analysis of new nuclear power plant costs filed by Florida Power & Light (FPL) with
the Florida Public Service Commission is the most complete and rigorous analysis of new
nuclear power plant capital costs publicly available to date. The FPL analysis is based on
the same reactors, G.E. Advanced Boiling Water Reactors (ABWRs) as the proposed
NRG project. Using this analysis, we find that the all-in total capital cost of the proposed
NRG two-reactor project would be in the $12 billion to $17.5 billion range. This range is
two to three times the lower NRG value of $6 billion and 1.7 to 2.5 times NRG’s higher
estimate of $7 billion. Moody’s October 2007 estimates are within this range, as is the
Progress Energy’s March 2008 estimate. Even these estimates do not take into account
higher imported component cost risks created by a falling dollar or possible continued
real cost escalation due to rising global demand for raw materials and skilled labor.

A 40 percent CPS’ share of the project would make its likely investment in the project in
the $4.8 billion to $7 billion range. Even the lower end of this range is considerably
higher than the total net value of CPS’s total electric plants of $3.9 billion as of the end of
its 2007 fiscal year. The high end would make CPS’s share equal to the high end of the
total NRG cost estimate.

As a municipal utility partnering with a merchant generator, the risks to CPS ratepayers
and San Antonio taxpayers of a large, long-lead time, capital intensive project in a time
of financial turbulence are considerable and need to be carefully evaluated. They should
be publicly disclosed and discussed.

CPS completed its own study of the costs of the proposed project and compared it to
some alternatives in 2007. This study has not been made public; it is being updated.

CPS has made a commendable commitment to the concept that efficiency should be
treated on a par with new investments in coal or nuclear plants. However, this
commitment is only in the very initial stages of operationalization and is at very low
levels of implementation relative to economic potential. The efficiency study of 2004
commissioned by CPS did not cover some technical elements and did not include
combined heat and power or distributed renewable energy sources within its scope. It is
also in urgent need of a financial update in light of increased costs of new coal and
nuclear plants.

An early decision to invest in the nuclear units would pre-empt and possibly even
foreclose full operationalization of the concept that efficiency, distributed generation, and
distributed renewables should be treated on a par with central station investments. This
could result in needless rate increases and financial risk. Additional financial risk may
accrue due to NRG’s approach to the project. For instance, NRG filed an incomplete
Combined Operating License Application with the Nuclear Regulatory Commission, a
fact that has could result in delays in the licensing process.




There are lots of good data and references included in the body of the paper. - K

[spag68]

1. New Nukes

I would advise any Texans that would be affected by taxes or rates of these plants, to look at the experience of Long Island. Out East, as it is referred to here, near the North Shore is Shorham. This plant was beset by problems from the start, but the important thing , is the bottom line. 8 Billion to build, t reactors and generators are brought on line and up to speed. Then after passing successfully the test, it was all shut down. Plant was closed and all precautions taken for cleanup, so they say. Another 1.5 Billion I heard last, but it may be more. NO tax revenue generated and ratepayers paying it off 20 years later and still not done. I guess like those unending turnpike commissions there will always be business cleaning up messes no sane person would have started. So think carefully in Texas, maybe give old Boone a listen, we know he will make money, but if he puts up a bunch of windmills, I'm not arguing.

[Dover]

Actually Texas has had it's own cost meltdowns over a nuclear plant

So potential problems with construction and cost overruns, etc. are not foreign to us.

The problem with Boone is the private ownership. If the state would like to build a wind farm
with our tax dollars, no problem.

[kristopher]

3. Why is private wnership of wind farms a problem?

I've not heard it put that way before. Could you explain a bit why you wouldn't like it to work with private ownership?

[Dover]

4. Privatization of utilities in general has hiked up prices. Before I spend any time

going on about privatization, maybe you can explain where you stand on a couple of things.

Do you not connect wind farms as a public utility?

Or are you an advocate of privatization who doesn't make any distinction between utilities and
other businesses?

[Nederland]

5. Not always

Privatization does not always result in increased rates. When privatization rules are written by businesses, as it was done in California, the results are disastrous. When the rules are written in the public interest and in a manner that insures true competition, the system works well.

[kristopher]

7. Hmm.

I asked about your statement first. It was a legitimate question that shouldn't be dependent on my views. Is there some reason you don't want to give at least a brief answer?

[Nihil]

8. She did.

Her brief answer was

> "Privatization of utilities in general has hiked up prices."

Nederland responded to say "Not always" (with a small explanation
coupled with a caveat) and now we are waiting with bated breath
for your own views on the subject (rather than just more questions
into her reasoning).

Over to you :hi:

[kristopher]

9. That speaks to utilities, not wind farms.

I'm interested in hearing more about the view that wind farms should be built by the government.

[Fledermaus]

10. I prefer the words "publicly owned" rather than government owned.

The term "public company" may also refer to a government-owned corporation. This meaning of a "public company" comes from the tradition of public ownership of assets and interests by and for the people as a whole (public ownership), and is the less-common meaning in the United States.

http://en.wikipedia.org/wiki/Public_company

I would love to see CPS invest more directly in wind farms. I purchase 100% of my electricity from them in the form of wind energy. I pay 9 cents per kwh for wind power. Can someone show me a privately owned utility willing to charge 9 cents per kwh for wind energy?

[Fledermaus]

6. I'll tell you what I know. publicly owned utilities have some of the lowest rates in the nation.

In Texas, publicly owned utilities have some of the lowest rates in the nation.

While privately owned utilities have some the highest.

CPS is owned by the city of San Antonio. We pay 6.3 cents per kwh. With added fuel costs its closer to 9 cents per kwh. If CPS makes any real profit, it goes to the city of San Antonio.

A friend, in Houston, is paying 17 cents per kwh. He is the type of person who doesn’t pay his bill until he gets a pink slip. If he’s late again he will be paying 21 cents per kwh.

Deregulation has been a nightmare in Texas.

I think all utilities should be publicly owned.

[Dover]

2. ..dupe