An external review of The Aerospace Corporation’s recent study of plutonium disposition options rejects Aerospace’s life cycle cost estimates for the Mixed Oxide Fuel Fabrication Facility and a downblending alternative for disposal of surplus plutonium, and projects similar costs for both programs, according to a report released yesterday. The Nuclear Infrastructure Council posted the review, which was ordered by MOX contractor CB&I-AREVA MOX Services and performed by consulting firm High Bridge Associates. The review estimates MOX and plutonium downblending would each cost about $20 billion in future life cycle costs. Incorporating MOX termination and sunk cost estimates would raise the downblending projection to $25 billion, the review summary states. About $4.4 billion has already been spent on building MOX, which is about 65 percent complete, according to CB&I-AREVA MOX Services.
Aerospace’s April report estimated downblending would cost about $17.2 billion. The summary states that High Bridge excluded Aerospace’s bloated “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 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. 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. 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.
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