Brian Bradley
NS&D Monitor
7/17/2015
[Eds. Note: NS&D Monitor originally published this story on July 10, following the email of last week’s issue. We have re-published the story in this week’s emailed issue, to make sure all of our subscribers have gotten the chance to read it.]
Released on July 8, an independent review of The Aerospace Corporation’s recent study of plutonium disposition options projects similar costs for the Mixed Oxide Fuel Fabrication Facility and a downblending alternative to dispose of surplus plutonium. The Nuclear Infrastructure Council posted the review, which essentially rejects Aerospace’s $47.5 billion life cycle cost estimate for MOX. Contractor CB&I-AREVA MOX Services ordered the review that was performed by consulting firm High Bridge Associates. While the review estimates MOX and plutonium downblending would each cost about $20 billion in future life cycle costs, it also notes that incorporating would-be sunk costs and costs for MOX’s termination would raise the downblending projection to $25 billion. About $4.4 billion has already been spent on building MOX, which is about 67 percent complete, according to CB&I-AREVA MOX Services.
‘Best Path Forward’
The review was released about two weeks after Energy Secretary Ernest Moniz instructed Oak Ridge National Laboratory Director Thom Mason to chair a Red Team review to examine disposal options of 34 tons of surplus plutonium and to recommend a “best path forward” by Aug. 10. The team will include 18 members in addition to Mason, according to the list of participants obtained last week by NS&D Monitor. ORNL Isotope Production Manager John Krueger will be the Project Leader. Overall, the team comprises eight Navarro Research and Engineering experts, three SRNL officials, two ORNL executives, two LANL employees, one TVA employee, one LLNL expert, one INL executive, one U.K. National Nuclear Laboratory executive, and one Stanford professor, according to the list. NNSA declined to release additional details about Red Team participants.
Moniz Letter Directs Analysis
Also obtained last week by NS&D Monitor, a June 25 letter from Moniz to Mason—who led last year’s Red Team review of the Uranium Proecssing Facility—states the MOX assessment should address the MOX approach, the “dilution and disposal approach,” and “any other approaches your team deems feasible and cost effective.” The letter also directs past cost future risk assessments and an analysis of MOX modifications. “The assessment should include: Evaluating and reconciling previous cost estimates of plutonium disposition options; analyzing ways to modify the MOX fuel approach, specifically the MOX Fuel Fabrication Facility project, to reduce costs if feasible; and examining how different risk assumptions can impact the total life cycle cost estimates,” the letter states. “In addition, the assessment should analyze the following: Schedule to begin disposition and complete the 34 metric ton mission; technical viability; ability to meet international commitments; and regulatory and other issues.”
High Bridge Excluded ‘Escalation’ Costs
Aerospace’s April report estimated downblending would cost about $17.2 billion. The company referred an NS&D Monitor requests for response to the High Bridge report to the National Nuclear Security Administration. The review summary states that High Bridge excluded Aerospace’s “escalation indices” nestled into its $47.5 billion MOX life-cycle cost estimate. “The 4% escalation used by Aerospace is significantly higher than the escalation rates previously directed by NNSA for use on the project (average of 1.4%),” the review summary states. The review repudiates Aerospace’s assessments for several variables as “difficult to follow.” The review states: “Base costs, contingency/risks, funding limits, escalation, and real year (RY) costs [yearly costs adjusted for inflation] for both options were presented in a manner that was difficult to follow. This provided an apparent focus on escalated RY costs.” In its study, Aerospace noted that its MOX estimate included additional life-cycle “to-go” costs. High Bridge said these costs and other estimates associated with finishing construction of the main MOX building “lacked visibility, formal discussion, and back up.”
High Bridge Estimates Lower Risk/Contingency Costs
High Bridge performed a “preliminary evaluation” of “risks/contingency base costs excluding escalation,” which include Aerospace risk/contingency cost estimates. The review pegs these “base costs” for MOX and downblending at $24.3 billion and $13 billion, respectively. High Bridge derived its $20 billion MOX and downblending life-cycle estimates by substituting Aerospace’s risk/contingency numbers with its own projections for that cost category. The review’s $3.7 billion MOX estimate for this cost category is half of Aerospace’s projection, while High Bridge’s $9.3 billion risk/contingency estimate for downblending is $7 billion over Aerospace’s prediction. “The identification and analysis of risk issues and contingency impacts identified for Option 1 MOX Fuel and Option 4 Downblend is flawed,” the review states. “MOX risk elements and resulting impact costs appear to be overstated and inconsistent while Downblend elements are clearly understated.”
Fiscal Year 2016 budget documents indicate that the government’s latest estimated cost of MOX is $12.7 billion (which includes D&D and other costs), with $9.1 billion estimated for construction.
Approps Amendment
In an apparent response to the Aerospace report, the House Appropriations Committee amended its version of the FY 2016 Energy and Water Appropriations Act in April to raise concerns about the analysis of the downblending and disposal option. In the amendment, which was adopted by voice vote April 22, House appropriators said the study does not provide a “full accounting” of the life cycle cost of downblending and disposal at the Waste Isolation Pilot Plant or another disposal facility. “For instance, the Department’s analysis does not account for the costs of operating and emplacing waste in WIPP for another twenty years beyond its current closure date of 2030,” the language added to the report accompanying the bill said. The full House and Senate Appropriations Committee cleared their versions of the Energy and Water Appropriations bill for FY 2016 during the spring.
The report was also amended to note that DOE would need significant funding above the Administration’s $345 million budget request in FY 2016 to cancel the MOX project and pursue downblending. The report directs DOE to conduct a full programmatic analysis of downblending and disposal at WIPP or elsewhere within 18 months of the enactment of the bill. The bill fully funds the $345 million request. “Considering the high near-term costs of either option, more accurate information on the full costs of the downblending option must be developed before such an alternative should be pursued,” the report said.
