There is a green faction within CPS but if the nuclear expansion is approved there will be no money left for anything but window dressing. It is a shame that our CPS trustees are so foolish.
Below is a commentary by Craig Severance on the latest CPS ploy, which is to say that it is too late to pull out, because they already invested too much, an investment that was not approved by the rate payers and citizens of San Antonio. Craig responds to the Express News articleon the subject.
From Craig Serverance:
1. Do NOT blame the messenger here, the SA Express-News seems to be doing an excellent job of reporting what Council members, CPS, the Board, and the Mayor are telling them. They are especially doing a good job of showing how jaw-dropping this really is. If you got the jaw-dropping response from reading the story -- THANK the reporter, then get on the line and make noise to the policymakers.
2. It is clear CPS has switched strategies away from the "we will present the public with this choice" of whether or not to do the nuclear project, by having public meetings etc. supposedly to decide the merits of the nuclear project. Instead (did you catch this?) they now are emphasizing this is "a project well underway". In other words, we already made the decision years ago, have already spent hundreds of millions of dollars on it, so just shut up & get out of our way. Thus, the Mayor's commitment to decide the project on its merits is being dumped by the wayside very quickly -- since they have lost the "merits" argument.
3. This is what I expected would happen -- the "sunk costs" argument ends up ruling the day (not whether the nuclear project is the best choice on its own merits) once a nuclear project is underway, since such vast sums of money are spent before anyone even gets a handle on what is going on.
4. It will in fact be another 2 1/2 yrs before they even pretend to have a "fixed" price on the project yet they are still spending hundreds of millions of dollars on this -- as a crap shoot, hoping it will work out.
5. The article talks about getting further down the road and then maybe selling off shares. They admit they are buying well more of the plants than they need, so they will have to sell off the extra. This can come in one of two forms: 1) If CPS keeps their excess capacity then when the plant comes on line they will try to sell this as excess power, selling the extra kWh's; OR 2) if CPS gets down the road a year or two from now it may then try to sell off the excess % of the plant then. I think it is important to note that in either case CPS is using public funds from SA ratepayers to speculate -- i.e. they are buying something they admittedly do not need for SA electric needs, and gambling that they can sell that to someone else without losing money on it (in way #1 or way #2 -- both are a gamble.) As I noted, with natural gas now so cheap, they will almost certainly lose this gamble.
6. If they get a couple years down the line, then it is quite clear they will NOT sell off the excess shares of the project then. Think about it. If the project actually looks good then (to them), they will want to keep it, thinking the excess kWh sales will actually work out well. However, if the project looks bad then, (e.g. the "fixed price" ends up really high, and/or natural gas prices stay low) -- they won't be able to sell it. They will be stuck with it. So -- if SA stays in now at its current (I understand actually 50%, not 40%) share, you are in for the long haul, forget selling it off later, that is simply not going to happen, even if you later want it to happen.
7. "Courage to pull the plug" -- won't happen then, because it's not happening now. Did CPS have the courage to present (this summer -- when new realities were very obvious) an honest and fair evaluation of options to the public? For instance, did CPS have the courage to admit their natural gas price projections are now so outrageously high as to be dishonest? Did CPS have the courage to admit their solar thermal cost assumption is more than double actual costs? Did CPS have the courage to admit it completely failed to even look at the "real Plan A" of using what SA is already doing, by firming up the renewables capacity it supposedly will be adding by 2020?
8. There simply is no courage -- it would require admitting that a mistake was made that has already cost SA ratepayers $276 million in wasted costs. Don't expect any courage to emerge, when the amount of wasted dollars rises to $676 million (or perhaps $1 Billion, as in the article). If no one can admit a $276 million mistake has been made, will anyone then be able to admit a $676 million or $1 Billion mistake was made and all that money was wasted?
9. Someone else -- and it would have to be someone new on the scene who is not responsible for having made the original mistake -- would have to say this has been a mistake.
10. An analogy might be an old car that is dying on you. We have probably all dealt with this. We all have had to muster the courage to make the right decision. Maybe you just invested $3,000 in a new engine, and then the transmission goes bad. Do you sink in yet more money? At some point, you realize that old car is just a money pit, and you pull the plug and move on. Kiss your old "bad" money goodbye, so you can keep the "good" money you still have.
11. Or -- to use Arjun's analogy that recognizes this is all because the world is changing so fast -- maybe you just invested $1 million on a foundation and room for a new IBM mainframe/punch card system and then the PC's come out. Do you keep investing more dollars to finish that obsolete system? Should anyone believe you are going to recoup your money by selling off shares of that obsolete system to someone else? Really?
12. A final point is very key. The idea of limiting funds now to be spent seems to be the only way to address things with the Council and Mayor -- but it seems to be a major jurisdictional dispute. The article seems to imply the CPS Board won't accept the City Council setting a dollar limit on what CPS can spend on a project. Too much into the details of managing the utility. Thus -- it may well be that the only clearly indisputable way to limit the dollars spent is to limit the amount of the BOND ISSUE. The City Council has to approve the Bond Issue amount since that is their jurisdiction (committing full faith & credit of City of SA). If the Council and the Mayor really want to limit the amount of $ spent, then it seems they should set a lower DOLLAR LIMIT on the BOND ISSUE itself -- rather than pretend the City Council has the jurisdictional authority to tell CPS Board how to spend money on a particular project. If no one is trying to cut the $400 Million Bond Issue amount, then no one is willing to use a tool that could actually work to limit the spending. (For instance, if $400 Million represents a 40% share, the bond issue should be limited to no more than the Mayor's proposed 20% share (i.e. a $200 Million Bond Issue) since the difference represents gambling on excess capacity anyway. Note that if this is limited with just the BOND ISSUE amount, the City Council does not limit how much CPS can spend, just how much they can borrow -- so if CPS really wants to spend the full $400 million they can start selling shares right now, raise rates, or raise the money any other way they want, they just can't borrow all of it using SA's full faith & credit.) If you don't limit the amount of the Bond Issue -- you give them everything they want, and away-you-go.
Final note -- San Antonio citizens need to let all these politicians know that they will REMEMBER who votes FOR allowing CPS to waste this extra $400 Million EVERY TIME THEY PAY THEIR UTILITY BILLS, and they will REMEMBER this at the next election.
Feel free to forward these musings to anyone you wish, including Mayor/Council etc. Nothing here is confidential or personal in nature. Just responding to the newspaper article, and the way the debate is changing.
Thanks so much for all your hospitality -- sorry you are in such a fix there, it is a shame so much of your money is going down the drain.
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