February 17, 2010
By Cassandra Sweet
Wall Street Journal
A nuclear-power venture owned by NRG Energy Inc., Toshiba Corp. and a Texas utility resolved a legal dispute Wednesday that allows one of the first new U.S. nuclear-power projects in decades to proceed.
The agreement, between the joint venture, Nuclear Innovation North America, and San Antonio municipal utility CPS Energy, reduces the utility’s stake in the south Texas nuclear power project to 7.6%, from 50%, with the joint venture retaining 92.4%, according to CPS and NRG.
The agreement ends a $32 billion lawsuit that CPS filed in December to reduce its participation in the project, and allows development of the plant to proceed, the companies said.
The project is part of a wave of new nuclear power plant development for which the Obama administration has expressed support as a way to fight climate change and meet growing U.S. energy demand. Unlike power plants that run on fossil fuels like coal and natural gas, nuclear power plants don’t produce significant greenhouse-gas emissions that have been blamed for contributing to climate change.
"With this agreement, we can continue developing one of the leading nuclear power projects in the country," said NINA Chief Executive Steve Winn.
The agreement also resolves ownership issues that might have held up an application the companies filed for federal loan guarantees, said NRG spokesman Dave Knox. If the companies get the federal loan guarantees, NINA, which is 88%-owned by NRG and 12%-owned by Toshiba, has agreed to pay CPS $80 million and donate $10 million over four years to its residential customer assistance program.
CPS said its remaining stake in the project is worth about $1 billion. The agreement requires CPS to help with the project’s loan guarantee application, but excuses the utility from spending more money on the project. The utility has said it has spent about $370 million on the project’s engineering and permitting.
"This agreement extracts the maximum value for our community at this stage of the project’s development," CPS Acting General Manager Jelynne LeBlanc Burley said in a statement.
The settlement requires approval by the CPS board, which could make a decision as early as Monday.
The project, estimated to cost between $9 billion and $12 billion, would add two new nuclear power units to an existing nuclear reactor, expanding the facility by 2,700 megawatts, enough power for more than 2 million homes.
CPS sued NINA in December, alleging that NRG misled the utility on project costs and saying it might withdraw. In January, after initial negotiations failed, NRG Energy Chief Executive David Crane said the company would exit the project and suffer a $400 million write-off if the dispute couldn’t be resolved.
The two sides agreed before the dispute to each sell a 10% stake in the project, but uncertainty around CPS’s involvement has stymied these efforts. Tokyo Electric Power Co. said last month it’s considering purchasing a stake in the project and remains interested.
–Mark Peters contributed to this article.
Write to Cassandra Sweet at cassandra.sweet(at)dowjones.com
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