Lower cost estimate pledge for nuclear plant

17 November 2009

Toshiba has promised Texan utility CPS Energy that it will provide a new, lower cost estimate for the South Texas Project before the end of the year.  


STP 3 and 4 (STPNOC)
Artist's impression of STP 3 and 4

Senior CPS executives travelled to Japan for face-to-face talks with the chief executives of lead contractor Toshiba and other key parties in the project after rumours of cost increases of up to $4 billion for the project. In June 2009, CPS Energy estimated the construction cost of the two new at $10 billion, or $13 billion with financing.

CPS interim general manager Steve Bartley said the company had delivered a "clear message" to Toshiba and to constructor Fluor that a significant cost-estimate increase to the project to build two new nuclear units would be unacceptable. "Specifically, we explained that our customers come first and that the board will seek the most reliable and affordable solution for CPS Energy customers," he said.

In response, the contractors had pledged to provide a new, lower cost-estimate by the end of 2009. Pending the new cost estimate, Bartley said, CPS is to work on a "contingency plan" to be ready to implement when the new cost estimate is announced.

Aurora Geis, chair of CPS Energy's board, described the key parties' willingness to work towards reducing the cost estimate as encouraging, and stressed that the company still believed there was economic value in the expansion plan. "We should protect this investment for our community," she said.

The plan to build two Advanced Boiling Water Reactor (ABWR) units to join two existing units at the South Texas Project site was launched in a 50:50 partnership between CPS and NRG Energy, with NRG acting through its Nuclear Innovation North America (NINA) subsidiary of which Toshiba owns 12%. The two companies recently agreed to find another buyer for 20 percent of the project, bringing CPS's share down to 40%. The CPS board even more recently voted to participate in the expansion at a share of 20-25%.

According to CPS, the trip to Japan had already been scheduled before the cost increase issue came to light.