The news of cost estimates for new nuclear reactors being knowingly and grossly lowballed emerged about 3 weeks ago, and the stalwart members of the involved public utility were quick to voice their concerns. According to national media source MSNBC:
CPS Energy’s board calls for investigation into higher nuclear cost estimateNovember 4, 2009 12:52 PM ET
bizjournals.com
CPS Energy’s board of trustees has called for an investigation into how and when management became aware of a substantially higher preliminary cost estimate from Toshiba Corp., the contractor chosen to build two new nuclear reactors at the South Texas Project in Matagorda County.
“In January, the board directed CPS Energy management to enter into an agreement to participate in new nuclear development at STP,” says CPS Energy Chairwoman Aurora Geis. “The much-higher Toshiba cost estimate is very troubling. My board colleagues and I are intensely interested in this matter, and thus we have requested a thorough examination as to what transpired.”
In response to the recent news about a $4 billion increase in the cost estimate, CPS Energy’s interim General Manager Steve Bartley says the estimate was preliminary and subject to ongoing scrutiny and challenge.
“In any event, a cost estimate that exceeds our preliminary total project cost of $13 billion is not acceptable and will result in CPS Energy exploring other options,” Bartley says. “Right now,...
Full article at:
http://news.moneycentral.msn.com/printarticle.aspx?feed=ACBJ&date=20091104&id=10644029 Local media has more detail and flavor:
CPS knew of higher STP cost year ago By Anton Caputo and Tracy Idell Hamilton - Express-News
11/22/2009
...At issue is how much Toshiba will charge for building two nuclear reactors. Since June CPS Energy has estimated the total cost of the project at $13 billion.
This number, the San Antonio Express-News has learned, breaks down in this way: About $8 billion to Toshiba, $1 billion for owner costs, $1 billion for contingencies and $3 billion for financing.
At that price, utility officials say, nuclear beats out all other energy alternatives and can be built while limiting bill increases to about 5 percent every other year for a decade. That would translate into a 9.5 percent base rate increase, which the council would have to approve.
In mid-October, Toshiba provided CPS with its latest estimate — more than $12 billion — a $4 billion gap that makes the project unaffordable. When the mayor and council learned of it because of a leak, they immediately canceled a vote on financing.
Now they're hearing Toshiba's number was that high as early as 2008.
CPS interim General Manager Steve Bartley said he was in the dark about the 2008 cost estimate until recently. “I have not been aware of any '08 estimate from Toshiba until just recently,” he said. “And that is a subject of an investigation that I am not going to go into.”
He declined to comment further.
That investigation was prompted by news that the October estimate from Toshiba was kept from the CPS board and the council. CPS Energy's internal auditor has been investigating who knew what, and when. Already, two senior executives — members of the nuclear development team — have been placed on administrative leave. The Express-News learned the probe has broadened to include the 2008 estimate as well.
While CPS officials never have publicly confirmed the $12 billion figure, either in October or last week, executives from NRG Energy, which is partnering with CPS Energy in the deal, have said Toshiba presented them with a preliminary price estimate of $12.3 billion in July.
Sources with direct knowledge of the deal told the Express-News that the Japanese contractor released an “assessment in cost” in November 2008 higher than that...
http://www.mysanantonio.com/livinggreensa/70733907.html So Toshiba raised their direct cost for construction estimate 50% before even obtaining public approval and before public hearings were held. Going from $8 billion to $12 billion in just the direct construction costs raises the total project costs to an ESTIMATED $17 billion - again, this is before moving a single shovel full of dirt.
If the project follows the very strong trend for nuclear plant cost overruns during the construction phase also where do you suppose it would end up?
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