Keep MOX project's cost in perspective

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Recent press articles about House and Senate concerns over potential cost and schedule overruns on the mixed-oxide fuel fabrication project at Savannah River Site raise the specter of the project’s supporters having to justify the effort all over again.

Costs can be estimated reasonably well for facilities that have been built many times over, such as an office building or a warehouse, but MOX is a one-of-a-kind facility in this country.

It is not unusual for large multiyear projects to have difficulty meeting cost and schedule objectives for a variety of reasons. For example, projects whose timelines span multiple election years and multiple budget cycles are more susceptible to scope creep and price changes for materials.

DIESEL FUEL was less than $2 per gallon in 2005 when the original $4.8 billion estimate was made to complete the MOX facility, and today it is more than $4 per gallon. Virtually every material that goes into the construction project is shipped there using diesel fuel. In fact, the Handy-Whitman Index of cost trends in the South Atlantic Region for electric utility construction shows total costs increasing by 30 percent overall between 2005 and 2012.

The fact that MOX’s product is a uranium-plutonium oxide fuel means that every safety-significant system or material must meet rigid quality standards referred to as NQA-1. Vendors must be NQA-1-certified to sell their wares to nuclear contractors. It costs a lot of money for vendors to obtain and maintain NQA-1 status, and since there haven’t been any new nuclear facilities built in this country for the past 35 years, there are very few qualified vendors.

THIS MEANS materials and systems are ordered from offshore or are fabricated in shops where the contractor must provide quality-assurance oversight. That means that contractor personnel monitor the work in vendors’ shops in person, whether it is in Augusta, California or France.

My purpose is to explain to the public why cost-estimating on this type of project is challenging at best, and not to find fault with the regulators, the contractors or the vendors. The midpoint of recent estimates that the project might cost $600 million to $900 million more than the 2005 estimate of $4.8 billion would represent an increase of 15.6 percent over 11 years if the facility starts up in 2016. This is only half of the increase predicted by the Handy-Whitman Index, and represents an average of 1.42 percent per year, or 1.28 percent per year compounded annually.

CONGRESS DOESN’T get to deal with many estimates that are that good. In addition, the U.S. Department of Energy’s National Nuclear Security Administration is considering cancelling the pit disassembly and conversion facility and using H-Canyon and HB-Line at Savannah River Site to provide the feedstock for MOX. This decision could lower the overall cost of plutonium disposition by billions of dollars while preserving and using facilities that are crucial to the nation’s future capability to deal with nuclear materials.

This relatively small increase in cost projected for MOX should not cause us to lose sight of the importance of completing the project and accomplishing the conversion of the plutonium from weapons of mass destruction to fuel for our economy.

We know it will be done in a manner consistent with the performance standards related to safety and respect for the environment that regulations require, and we have grown to expect, from projects at Savannah River Site.

(The writer is executive director for Citizens for Nuclear Technology Awareness, in Aiken, S.C.)

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SCEagle Eye
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SCEagle Eye 06/10/12 - 02:54 pm
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Include the $500 million/year

Include the $500 million/year MOX plant operating cost (DOE estimate), payment to utilities to use the experimental MOX fuel, administration costs, support facilities, decommissioning of facilities, etc. and there could be $20 billion left to be spent on this program. This is far above the MOX plant costs alone, which has gotten out of control in the last few years. The time for fiscal conservatives to pull the plug on this wasteful program is now, before costs soar event further.

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