CPS seeks $32 billion in STP damages

December 24, 2009

By Anton Caputo
San Antonio Express-News

CPS Energy and its partner traded high-dollar blows Wednesday in the growing legal battle over the nuclear project.

Nuclear Innovation North America, CPS Energy’s partner, claimed San Antonio’s utility was in breach of contract and should lose the hundreds of millions it invested if it didn’t agree soon to keep funding the deal.

NINA, which is a nuclear development joint venture between NRG Energy and Toshiba Inc., made the accusations in a response late Wednesday afternoon to a lawsuit CPS filed earlier this month.

Hours later, CPS shot back with new allegations against NINA, NRG and Toshiba, the project contractor.

In court documents, CPS claimed the companies engaged in "fraudulent, defamatory and illegal conduct" to "manipulate project costs for their collective benefit."

CPS asked the court to award it at least $32 billion in damages.

"The message I want to send NRG and NINA is that we are not suckers," CPS Acting General Manager Jelynne LeBlanc-Burley said Wednesday night. "A business solution will benefit both, the sooner we get out of the courts the better. But make no mistake, I am not afraid of having this issue resolved in the courts."

NRG spokesman David Knox said the company hadn’t had enough time Wednesday night to comment on CPS’ allegations.

NINA President Steve Winn said earlier in the day that his company also preferred to settle the lawsuit quickly out of court so it could continue with the development of two proposed reactors at the South Texas Project.

"I think there are probably 20 different ways where there might be a solution that allows the project to go forward and the appropriate long-term decisions to be made by CPS," Winn said. "Our goal right now is to get to a negotiated outcome as quickly as we can."

CPS’ new allegations included the charge that NRG and Toshiba formed their partnership without disclosing their full financial relationship.

The city-owned utility also accused NINA, NRG and Toshiba of a "conspiracy" by luring CPS into the project to help finance it and then "engaging in a coordinated public effort to disseminate false information about CPS Energy for the purpose of ousting CPS Energy."

"His (Winn’s) history has been spent on Wall Street, and I don’t want him to get the impression he can come to San Antonio, Texas, come to Commerce Street, and sell this community a bill of goods," LeBlanc-Burley said.

In its lawsuit, CPS asked the court to clarify its rights if it pulls out of the project.

Winn said the agreements between the companies are clear and "that they (CPS) lose everything." NINA claims CPS has "blocked the approval of several pending purchase orders" that are critical of the project and taken other steps to stall the project.

NINA also contended San Antonio’s indecision on whether it will stay in the project put it in jeopardy. It asked the court to declare CPS actually has withdrawn from the project, which CPS denied, and no longer had any ownership or the ability to recover the approximately $300 million it spent.

NINA also charged that CPS’ "ongoing vacillation" put the project’s federal loan guarantees at risk. Such loan guarantees are thought to be crucial for nuclear projects because of the billions of dollars needed and the fact that the federal government hasn’t issued a permit to build a nuclear plant since the 1970s.

The federal government approved $18.5 billion in loan guarantees, and, according to recent statements from Vice President Joe Biden’s office, planned to issue those guarantees to two projects.

The South Texas Project is on a short list of four that could receive the guarantees. But Winn said it had fallen from first to second because of the delays, and soon could fall to third.

That move, he said, could prove fatal.

"If we don’t resolve this soon, we may not need to resolve it at all," Winn said.

LeBlanc-Burley said that CPS was in contact with the Energy Department’s loan guarantee office multiple times since Dec. 15 and informed it of CPS’ timetable, which called for making a decision by mid-January.

"Understanding that schedule, they have not indicated that we have placed any consideration at risk," she said.

CPS spent or approved spending about $375 million on the project so far. If it stays in, that number would jump to $1.2 billion before the scheduled 2012 construction begins. The ultimate cost of the project was still unknown and won’t be set until then.

Toshiba was expected to deliver an official cost estimate next week. LeBlanc-Burley said her staff would vet the estimate and present it to the public in mid-January when it makes a recommendation about San Antonio’s role in the nuclear expansion.

CPS’ board and the City Council would have the final say.

A preliminary cost update recently obtained by the San Antonio Express-News put the total cost of the project at $18.2 billion. That was about $5 billion more than the utility said the project would cost at community meetings this summer.

LeBlanc-Burley said that the number was an informal estimate provided to the board for planning purposes and not the official number.

She also said she believed the nuclear project is a valuable asset, but it might not be right for San Antonio.

"This particular deal remains to be seen," she said. "This particular project will be evaluated on its merits, and it may not be the best opportunity for this community."

Fair Use Notice
This document contains copyrighted material whose use has not been specifically authorized by the copyright owner. SEED Coalition is making this article available in our efforts to advance understanding of ecological sustainability, human rights, economic democracy and social justice issues. We believe that this constitutes a “fair use” of the copyrighted material as provided for in section 107 of the US Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond “fair use”, you must obtain permission from the copyright owner.