January 9, 2010

By Anton Caputo and Tracy Idell Hamilton
San AntonioExpress-News

Last month, CPS Energy was adamant that the agreements governing its proposed nuclear project were "silent or ambiguous" about what happened if one of the partners pulled out of the multibillion-dollar deal.

Now the municipally owned utility appears to have changed its plan of attack, arguing that the agreements are in fact "unambiguous" on this crucial point: CPS gets to keep its share of the nuclear deal — even if it stops paying.

The utility is asking the court to order the sale of the project and split the proceeds, force partner Nuclear Innovation North America to buy CPS Energy’s share or give CPS a year to sell. It’s still seeking $32 billion in damages.

The utility’s latest salvo in its lawsuit against NINA comes as its highest-level executives prepare to meet with NINA on Monday morning in a mediation brokered by Mayor Julián Castro.

Also Monday, the CPS Energy Board of Trustees will interview four candidates to replace Chairwoman Aurora Geis, who was urged to resign by the mayor in the wake of an internal investigation that found a high cost estimate was kept from the board and the public.

The report shook the public’s and City Council’s faith in the project, prompting CPS to file a lawsuit asking a judge to clarify the rights of any party that wished to withdraw from the project.

When NINA responded by asserting that CPS Energy had effectively withdrawn from the deal and so forfeited its rights, CPS upped the ante with the $32 billion suit, charging NINA with fraud and malicious intent.

NINA is a partnership between NRG Energy and Toshiba Inc., the contractor in the proposed project.

Acting General Manager Jelynne LeBlanc-Burley said the utility hadn’t changed tack in its legal argument and that CPS Energy still wants clarification from a judge on its rights.

"Generally our position has been that the documents are unclear as to what the party does if they choose to withdraw and that is what we’re asking the judge to clarify," LeBlanc-Burley said.

The utility wants to know what happens to the roughly $350 million it has poured into the project, plus its half of the value of the nuclear reactor site. CPS claims the site, along with existing water rights and infrastructure, is worth more than $2 billion.

Despite the amped-up rhetoric, the parties say they hope Monday’s talks will lead to a solution.

"We remain focused on negotiation, not litigation," NRG spokesman David Knox said.

LeBlanc-Burley agreed a negotiated settlement was preferable to a legal battle.

"Our position is to and will always be to protect the ratepayers," she said.

Castro, who also sits on the utility’s board, offered a brief statement Friday: "I’m hopeful that Monday’s talks will produce an agreement that respects CPS Energy’s past investment in the project and acknowledges the utility’s land and water rights going forward."

On Monday, the board will interview the four finalists to replace Geis.

The candidates are: Nancy Kudla, an entrepreneur who founded the technology company, dNovus RDI; Charles Foster, a former group president at AT&T; Gary Cram, founder and president of CRAM Roofing; and Brian Herman, vice president for research at the University of Texas Health Science Center.

The utility’s board expects to make its choice Monday or Tuesday. The City Council could ratify the decision Thursday.