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NNSA Acknowledges ‘Considerable Cost Increase’ For MOX Facility
WASHINGTON – The head of the National Nuclear Security Administration acknowledged on Tuesday that the $4.8 billion cost estimate to build a facility to convert surplus nuclear-weapon plutonium into reactor fuel is “no longer valid” and that the actual price will likely be much higher.
When construction on the mixed-oxide fuel facility at the Savannah River Site in South Carolina began in 2007, the project was projected to cost $4.8 billion and to be completed in 2016. The nonpartisan Government Accountability Office this month confirmed rumors that it would likely cost an additional $2 billion to finish construction.
Speaking at a House Appropriations subcommittee hearing, acting NNSA Administrator Neile Miller said her agency was in the process of re-evaluating costs for the plant and could not yet provide an updated projection.
“I’m reluctant to give you a number,” Miller told energy and water panel Chairman Rodney Frelinghuysen (R-N.J.). “There are a lot of numbers floating around out there, but I think it is very safe to say that we are looking at a considerable cost increase.”
Watchdog groups and select Democratic lawmakers have increased their criticism of the project in recent weeks as word of cost increases began to circulate. Some have called for canceling the effort and there have been reports that the project could sustain a sizable cut if Congress and President Obama do not reach a deal by Friday to avoid significant new federal budget reductions.
Miller did not speculate on the future of the program, but said the cost review is “close to being complete.” She attributed the anticipated price increase to a number of factors, including “project management challenges.”
“I would point to the fact that overtime, the technology development to do this project, which is to say to produce mixed-oxide fuel from weapons grade plutonium -- which was new really, although MOX fuel itself was not new -- posed challenges that the people we hired could only anticipate,” Miller said. “I think they did the best they could at the time with the information they had.”
The decline of the domestic nuclear industry, which Miller noted has gone nearly three decades without a new construction project, also played a role. The Nuclear Regulatory Commission in 2012 approved the construction of a new reactor for the first time in nearly 30 years.
“It’s been extremely challenging because people simply put are out of practice and have had to take much longer than anyone would have anticipated to do things so that they would meet the standards that the facility itself requires,” Miller said. “The fact that we have nuclear power projects finally going in this country -- on the other end of the supply chain – began to siphon off skilled workers to those projects.”
Officials for Shaw Areva MOX Services, the contractor in charge of the project, have noted that nuclear-related construction costs have generally increased in recent years.
Company spokesman Bryan Wilkes said the Handy-Whitman Index of Public Utility Construction Costs cited a roughly 30-percent increase over the last seven years in costs related to the construction of nuclear facilities in the South Atlantic Region, which covers nine U.S. states. Some components, including electrical equipment and transformers, increased between 45 and 72 percent during the same period, he said.
Shaw Areva MOX President Kelly Trice noted at a nuclear deterrence conference on Friday that the cost of other energy sources, such as diesel fuel, have also increased significantly in recent years.
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