Fukushima to San Antonio
Even if you are not among the crush of avant-garde shrewdly cramming Japanese in order to be on a first named basis with the radioactivity arriving from the Land of the Rising Sun, you may, nevertheless, find yourself pondering the meltdown that is launching those particles in our direction.
Then, once you have learned that the corporation whose irresponsible behavior is most responsible for that situation, Tokyo Electric (TEPCO), has been given a sweetheart deal
to join the syndicate that is expanding the nuclear complex known as the South Texas Project (STP), despite its long and public record of cutting corners on plant safety, surely you will recognize the need to understand what the push towards more nuclear power has meant for the Americans who call San Antonio home.
The macro-economic environment that our public utility (CPS) entered in 2009 was (and is) characterized by the dynamics of industry trying to outperform mature economies. In the United States, even in the best of times, we no longer expect growth to average much above three percent a year. In Japan, even such modest numbers are a fantasy. For a nation whose economy has produced a stagnation dubbed "the lost decades", any real growth at all would be heartening. While Japan and the USA may remain blue-chips, they are no longer growth stocks. The low-hanging fruit has all been picked. To satisfy the demands for high returns, these societies have supplemented normal business acumen with new areas of heightened profit: technological revolution and overhaul, investment in overseas "growth" markets (typically "emerging" or "third world" nations), financial chicanery, and privatization. In regards to overseas investment, Japan has, at the highest levels of business and government, formed a consortium of six of its most powerful corporations. What they are exporting to emerging and Third World markets is nuclear development. With a moribund and withered domestic nuclear industry emasculated by Three Mile Island coupled with the largest demand for energy on the planet offering almost unlimited profit potential, the United States fits neatly into the description of an emerging or Third World market. NRG Energy, of New Jersey, is the American face on this invasion. Their job, in a financial environment reluctant to take a flyer on risky nuclear deals in an uncertain market, is to "privatize" by leveraging their existing relationship with a public utility to provide the heavy lifting necessary to both pay for the project and the political cover to get the Federal loan guarantees without which the entire idea is a dead letter. These are the interlocutors with which the representatives of the people of San Antonio have decided to joust.
Steve Winn heads the syndicate created by NRG energy to get this deal done. It's called "Nuclear Innovation North America" (NINA). Mr. Winn is a top man in his field, formerly a senior vice-president at Lehmnann Brothers, whose specialty was financing energy deals. This top pro earns his money by getting the best deal for the stockholders of NRG.
San Antonio is, when ranked by population, among America's top ten cities. As cities go, it is an above average place to live. Some decades ago, inspired by the abundance of natural gas hereabout, the city leaders decided our public utility, CPS, would rely, almost entirely, on gas. Unfortunately, when that deal went sour because our supplier of choice would not deliver at the promised price, it was determined that we would never again put all our eggs in one basket.
This resolved into our (CPS') involvement in the original development of the STP project that produced the reactors known as STP 1 and STP 2. These were eventually completed way behind schedule and fantastically over cost. If we flash forward to current time, with those reactors approaching the halfway point in their life expectancy, we find once again our city leaders pondering which direction to go to meet the expanding energy needs generated here by our steady growth in population.
Before the public was consulted, and hearings held, a consensus was formed among the city's aristocracy. These included our public utility, our mayor and city council, the media including the editor and reporters of our only real daily paper, the usual Chamber of Commerce types, and those that see nuclear energy as clean and not contributing to global warming. Most of all, electricity generated by nuclear reactors was touted as the cheapest alternative.
Once this decision was made, the hard sell was on. Predictions of population growth were used to heighten the urgency of acting: buy now. Unless we did this deal quickly, the lights would go off, and our jobs would become tumbleweed. The second part of the hard sell was the "come-on" price. A neat number, a cool ten billion, plus the obligatory three billion additional for financing, was floated. Despite its having been around this track before, the pro-nuclear group assured the public that these numbers were written in stone.
Suffice to say, that in the whole wide world, the only people who believed that the first "price" would actually be the real price, and that a nuclear project would be completed on time and on budget, were the "Happy Talk Chorus" (HTC) cheerleading this deal in San Antonio.
Perhaps, because no firewalls were ever erected between the public utility and the private developer in the initial deal, and in a general atmosphere where "public" is increasingly a dirty word; the initial plan developed by CPS was not received with incredulity: San Antonio was going into the energy business. We were going to buy
a full fifty percent interest, even though this would be way more electricity than even the most alarmist cheerleaders had claimed we would need. When questioned about a plan that had San Antonio buying more energy than she needed, the boosters blithely assured the public that excess capacity could easily be disposed of on the energy market. Little was said about the wisdom of a public utility going into the energy business; and less about the fact that it seemed that, once again, most of our eggs were going into a single basket. Perhaps discussion of these points was limited because another overriding problem made them moot. San Antonio simply did not have 6.5 billion dollars to buy a half share of the then 13 billion dollar project.
As the months passed, and the anti-nuclear crowd argued for alternative energy, those that had decided, in advance, for expanding the South Texas Project, began to retreat from the full level of partnership first proposed. The share we could afford to buy got progressively smaller. First it went to 40%, then 20%, and finally 10%. At all times, based on a continuing faith in the "come on" price of 13 billion, each ten percent was valued at 1.3 billion.
At the same time, rumors began to appear, out of town, that the real cost of building nuclear reactors in Texas was known to Mr. Winn and his bosses at NRG. Nonetheless,
The Happy Talk Chorus in San Antonio pushed ahead with the final plan of buying in at the fantasy price of 1.3 billion per ten percent.