Express-News Editorial Board October 28, 2009
Two troubling issues emerged from news that the cost estimate for the proposed expansion of nuclear generation at the South Texas Project has suddenly gone up by as much as $4 billion. That's a 30 percent increase, and CPS Energy won't have a fixed-price contract for the two new reactors until at least 2012.
Toshiba Corp., the main contractor for the expansion, may merely have thrown out the inflated cost as a negotiating tactic. That's what CPS Energy interim general manager Steve Bartley suggests it is.
Another explanation could be that Toshiba is weak in producing estimates, with the initial figures being too low or the current ones being too high.
Either way, the moving target has established a troubling precedent for a partnership with a municipally owned utility.
For CPS to proceed with the planned STP investment, it must have support from City Council and, ultimately, the consent of its ratepayers. Whether the new numbers reflect hardball on pricing or flawed estimates, they don't inspire confidence among city leaders or the public for a long-term, multibillion-dollar project — especially not at this early stage.
More troubling than Toshiba's estimates are the actions of CPS Energy. Bartley told the Express-News he learned about the cost increase "within the last week and a half or so." But Mayor Julián Castro — and the public — only learned about it this week after an aide inquired about rumors of a price escalation.
By coincidence, City Council was scheduled to vote today on an additional $400 million in bond financing for the project. The mayor and council members have every right to wonder whether CPS officials intended to inform them of the increase prior to the vote.