Wednesday, April 20, 2011

By Tracy Idell Hamilton
San Antonio Express-News

NRG Energy stopped all spending on the South Texas Project nuclear expansion and will write off its investment in the face of deeply diminished prospects for the project since Japan’s worst-ever nuclear accident.

"The project is not dead," CEO David Crane said Tuesday, "but it’s not moving forward at this point, and to be frank, under the current circumstances, the reality of it moving forward in the foreseeable future is not high."

The company plans to record a first-quarter pre-tax charge of about $481 million from Nuclear Innovation North America, its joint venture with Toshiba, NRG said. Toshiba funded $150 million of that.

NINA will continue to seek an operating license from the Nuclear Regulatory Commission, Crane said, as well as a federal loan guarantee from the Energy Department.

He called that decision "smart asset management," saying he could see a time when the project near Bay City, with a license and loan guarantee in hand, will be attractive to new investors.

Toshiba, which holds a 12 percent stake in NINA, will take over the costs of pursuing the NRC license. But Crane acknowledged any roadblocks in that process could cause Toshiba to drop its funding.

CPS Energy, which retains a 7.6 percent stake in the expansion, said it will continue to support efforts to secure the federal loan guarantee and operating license. It stopped its investment, which totaled about $386 million, more than a year ago.

The city-owned utility would receive $80 million from NINA if the project gets the loan guarantee.

Spokeswoman Lisa Lewis said it’s too soon to tell whether CPS ultimately will lose its investment in the project. She noted there were times during the development of STP’s original two reactors when the project looked dead, only to be revived by new partners and new circumstances.

CPS is a 40 percent owner in STP 1 and 2; Austin Energy owns 16 percent and NRG 44 percent.

Anti-nuclear activists cheered Tuesday’s announcement but were dismayed that NRG didn’t pull the plug entirely.

Karen Hadden of the SEED Coalition, an Austin-based environmental organization, said her group and others would continue to fight the licensing efforts.

NRG recognized last month that it likely lost a major investor in the expansion after Tokyo Electric Power’s Fukushima Dai-Ichi nuclear reactors were crippled by a tsunami spawned by an earthquake. NRG then suspended indefinitely all detailed engineering work and other pre-construction activities. That reduced the project workforce from 1,000 to about 350.

NINA will keep three employees on the project, Crane said.

The South Texas Project Nuclear Operating Co. had about 120 workers assigned to the expansion at its peak; that number now is 24.

Tepco’s president confirmed Monday, according to a story on Nikkei.com, that the company will reconsider its overseas business strategy as it focuses on bringing the damaged reactors under control.