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CPS Execs return from Operation Cacahuates Japonés

(Or: 'Bless Me, Panchito')

Greg Harman
gharman@sacurrent.com

For CPS Energy CEO-lite, Sr. Steve Bartley, four pounds may be a small price to pay for redemption. That’s how much he told the utility’s Board of Trustees on Monday that he lost during a four-day trip to Japan last week on a nuclear rescue operation.

Bartley and fellow utilitarians, CEO Milton Lee and Nukemeister Bob Temple, were hoping to drive back down Toshiba’s cost estimate for the planned expansion of the South Texas Project nuclear complex outside Bay City.

After a summer spent pimping a “tantalizing” $13 billion construction job, news broke the day before the City Council was to vote on a $400 million infusion that Toshiba’s figure had mysteriously bloomed to $17 billion. Worse, Bartley and others had known about the estimate explosion and apparently weren’t going to tell Council pre-vote.

While the foray into Toshiba Territory didn’t collapse the company’s figures immediately, the manufacturer of fax machines and reactor vessels pledged to have a new, lower number back to CPS by December 31.

The message that San Antonio has a definite “affordability threshold” was not lost on our Asian partners, Bartley said. “They understood the urgency of our need,” he said.

In preparation for the utility’s scheduled January rate-hike hit-up of Council, CPS will have charted out two courses forward: one nuclear, (and thanks to strong encouragement from Mayor Julián Castro) also one not-so nuclear, hewing to natural gas, energy efficiency, and renewable power.

While board member Steve Hennigan wanted to know what Toshiba’s number actually was — exactly — CPS attorneys wouldn’t allow the number to be spoken in open meeting. In fact, when a new number is rolled out in late December or early January it will reflect (again) CPS’ estimate, not Toshiba’s confidential figure, Bartley said.

Aside from solid numbers, Hennigan also fretted that CPS does not have its own designated negotiating team (apart from the on-call Bartley Bombers), but share a team with our nuke partner NRG Energy and the NRG-Toshiba construction tag-team NINA (Nuclear Innovation North America LLC). “Their self interests may not align with our interests,” he said. “Their interests may be different than ours.”

Bartley said that was understood.

Not to be outdone in dropping tantalizing tidbits, Mayor Castro said that the actual date that San Antonio would need a new source of power online had slipped from 2020 (the date ballyhooed by Bartley y Co. all summer) to 2023.

Castro promised recently that if CPS couldn’t get the estimate back down to a more manageable size, the project was dead. That must have been rattling in many heads, as utilty reps and board members spoke of the value of the project “whether or not” San Antonio chose to build it out. In the back of every head was the possibility of a sell-off.

While the airplane food and “exotic” fare of Japan didn’t sit well with Bartley (“With my Texas tastes, I had a bit of an issue,” he said), his homecoming binge at Panchito’s may wind up sitting just as precariously. The meeting room was full of detractors awaiting sour news with baited breath. And the financial outlook for the utility is not good.

Raises are being deferred; contractors are being laid off and work deferred; and employees are being asked to reduce travel, said Paula Gold-Williams, the utility’s chief financial officer. Depending on January's nuke vote are promised scrubbers for the coal plants and roll-out of a smart grid.

Yet, one way or another, rate increases are coming early next year, said Gold-Williams. Without the fiscal bump, she said, “we will not be able to maintain our infrastructure.”
Without the nuclear, that bump will be kept to 7.5 percent, she said, as opposed to the previously promised 9.5 percent.

If Bartley doesn’t have heartburn now, chances are he’ll be tasting his Panchito’s again come January.

Posted by gharman on 11/16/2009 6:41:05 PM
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