Timing Is Everything

Events in Japan cast a long shadow

A week before the earthquake in Japan triggered the world's worst nuclear emergency in 25 years, the nuclear industry had cause for celebration: The U.S. Nuclear Regulatory Commission announced March 2 that two proposed reactors at the South Texas Project had passed a final environmental impact assessment, bringing the project an important step closer to obtaining a construction and operating license. It was a milestone for the project, which in 2007 was the first in almost 30 years to file an application with the federal agency; nonetheless, it still has a way to go, and hopes for its success – which have hinged on whether utilities like Austin Energy would choose to take part – have now been eclipsed by events on the other side of the world.

Austin Energy owns 16% of the nuclear power plant's two reactors, which have operated at Matagorda Bay since the late Eighties. NRG Energy owns 40% and is behind the proposal to double the site's number of reactors, in partnership with Toshiba. NRG hopes to bring the first reactor online in 2016. First, however, the project needs the license, which is dependent on last week's environmental impact statement as well as completion of a safety evaluation report and a ruling from the federal regulatory commission. NRG Energy also needs customers willing to buy the power. According to Juan Garza, NRG's president of advanced technology, "It's important to us that we get [power purchase agreements] ... to show the federal government that there is a market for what we're trying to do." Now, the crisis in Japan – where engineers at several reactors have been struggling to prevent nuclear meltdowns – could make that task difficult. As Reuters reported Monday, both Standard & Poor's and Moody's bond rating houses are now making gloomy predictions for U.S. nuclear projects like STP, suggesting they are at risk of rising costs, delays, and even cancellation.

While Austin Energy General Manager Larry Weis said Monday that the crisis in Japan is not affecting his outlook on STP specifically, he acknowledged it is a likely setback for the entire industry. NRG proposed last month that Austin Energy enter into a power purchase agreement for energy expected to eventually come from the new reactors. Such a contract would theoretically shield AE from unknowns by allowing it to pay a fixed price – particularly important given the energy utilities' rocky past with the South Texas Project, which for many years was plagued with cost overruns and delays. Over time, however, the nuclear power plant has become one of Austin Energy's lowest-cost resources, and as NRG officials point out, the plant was named one of "America's Safest Companies" last year. Garza also says that the new units – advanced boiling water reactors – would show vast improvements over the older ones because they'd feature the same modular design as four reactors already built within budget and on time in Japan.

According to NRG spokesman David Knox, none of those four reactors are among those making headlines right now; those units sit farther from the earthquake's epicenter and are younger, as well. Nonetheless, the events unfolding across the Pacific – the mass evacuation of residents around the affected power plants and the actions of those risking their lives to cool the reactors – make plain the dangers both of living near and of working in a nuclear plant. As pointed out over the weekend by Karen Hadden, executive director of the Sustainable Energy and Economic Development Coalition, "Any reactor can have a meltdown."

The SEED Coalition has joined with other environmental and public interest groups to oppose any Austin Energy involvement with the new reactors, citing both safety and financial concerns. The nuclear commission's Atomic Safety and Licensing Board has granted hearings on three of the SEED Coalition's contentions: "fire safety" (asking if the power plant can adequately manage a fire emergency); "co-location" (asking how an emergency at one reactor might affect three others); and "need for power" (the South Texas Project must explain the need for adding 2,700 megawatts of power when new building codes are likely to save nearly as much simply through energy efficiency). The first hearing is likely to take place this fall, says Hadden.

The SEED Coalition is also opposing efforts to extend the operating licenses for the two existing reactors by 20 years (to 2047 and 2048, respectively), citing concerns about a cooling reservoir leak and tritium, a radioactive isotope, found in nearby wells and the Colorado River. The Nuclear Regulatory Commission is accepting public comment on the renewal through April 1. The licensing effort could also be yet another potential casualty of the events in Japan. According to a weekend statement from Moody's, "issuers that recently filed for a 20-year operating license extension with the NRC are likely to receive additional scrutiny."

While environmental concerns loom large in arguments against the South Texas Project, NRG cites environmental reasons in its favor. "To me, there's an element of emergency," says Garza, "in that it's an opportunity to build 2,700 megawatts of capacity that essentially are carbon-free." With Austin Energy's climate protection goals in mind, NRG has also offered to buy the utility's share of the coal-burning Fayette Power Project.

So far, AE isn't biting. While the utility remains open to a nuclear power purchasing agreement, says Weis, it simply isn't in the position to be "shopping" for baseload resources. With a goal of beginning construction in 2012, NRG officials have expressed hope of securing a deal with AE this summer. Weis, however, says the utility feels no such urgency. Right now, he says, Austin Energy is prioritizing its renewable energy goals, an effort made possible by the recent passage of an affordability forecast allowing the utility to move forward with its generation plan, several years in the making. "It's kind of a timing thing," says Weis. "We can't add all these things at the same time."

For more on the South Texas Project's license renewal, or to make comments, call the Nuclear Regulatory Commission at 301/415-6337 or see austinchronicle.com/s/?e=1162263.

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South Texas Project, NRG Energy, Austin Energy, Juan Garza, Karen Hadden, SEED Coalition

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