Texas skirmish
Instability among vendor alliances and a larger number of immature reactor designs is bound to raise the stakes for everyone, as it did in Texas recently. After the South Texas Project Nuclear Operating Co. (STP) accepted proposals for two new 1,350-MW ABWR reactors from GE-Hitachi and Toshiba, it submitted an application to the Nuclear Regulatory Commission (NRC) to build the units using the GE-Hitachi technology. By all accounts GE-Hitachi had a lock on what would probably be the first two new reactors built in the U.S. in a generation.
STP is jointly owned by NRG Energy (44%), CPS Energy (40%) and Austin Energy (16%). At our May ELECTRIC POWER Conference, Milton Lee, head of CPS Energy, suggested during the CEO Roundtable that GE-Hitachi had balked at selling STP the ABWR technology. Instead, it had pushed its next-generation ESBWR, which is still years away from NRC design certification. Without the reactor supplier on board, the NRC application was effectively frozen during these negotiations. “We want to build an ABWR,” Lee said. “They [GE officials] basically said, “We don’t want to participate with you.’ ”
STP abruptly changed allegiances and contracted exclusively with Toshiba to build the ABWRs, a reactor design that Toshiba has licensed from GE-Hitachi. “It’s amazing,” Lee said. “They can build one in Japan, but they won’t build one in the U.S.”
GE-Hitachi disagreed with Lee’s assessment in a statement noting that “other business disputes” were responsible. “GE-Hitachi is no longer participating in the STP project because the owners decided to contract with Toshiba to be the prime contractor,” said the statement.
Judging from press coverage and industry trends, the major unresolved issue was likely the allocation of project risks, including price escalation calculations, in the turnkey contract. But it seems to me those same risks would be even greater for an ESBWR, which lacks a track record. More likely, Toshiba, which has the largest ABWR nuclear base in Japan, made STP an offer it couldn’t refuse. My guess is that STP played GE-Hitachi against Toshiba to get the best deal possible—and so they should. When GE-Hitachi balked at the contract terms, they lost their chair at the negotiating table.
Team loyalty is so 20th century
In years past, a utility would usually standardize on either the PWR or BWR technology for all plants—at least at a particular plant site. Today the deal trumps technology-team loyalty as developers strive to pick a winning team while its equipment is still being tested and certified. Other owners will follow STP’s lead—if only to avoid being stuck with an also-ran technology for 50 years.
STP’s experience shows that bluster can backfire—a lesson Edison, and GE-Hitachi, learned the hard way.
Email
Comments
Print
Reuse
