January 26, 2010

By Anton Caputo
San Antonio Express-News

Nuclear Innovation North America looked to score a quick knockout Monday as the massive nuclear lawsuit filed by CPS Energy got under way.

408th District Court Judge Larry Noll was expected to announce Tuesday whether the tactic worked.

NINA, which is being sued by CPS over the teetering proposal to build two more reactors at the South Texas Project, asked Noll for a summary judgment, a move that would give NINA a victory in the first phase of the case.

NINA, which is a partnership between NRG Energy and Toshiba, contends that CPS should lose the roughly $350 million it has invested in the project and its ownership rights if it withdraws. Its attorneys argued an abbreviated version of the case Monday.

"It is pretty clear that NRG is intent on trying to convince a judge that our customers should lose all of their investment," said CPS acting General Manager Jelynne LeBlanc-Burley, adding that she still holds out hope for a settlement.

CPS is suing NINA for $32 billion, claiming the company pulled CPS into the deal by making fraudulent claims and then orchestrated a misinformation campaign through the media to force CPS out. The claims of fraud and conspiracy will be argued in a yet-to-be scheduled second phase of the trial.

The first phase, which began Monday, focuses on the two agreements that govern the partnership. Attorneys on both sides argued those contracts clearly favor their clients’ position.

CPS attorney Ricardo Cedillo argued that the agreements support the contention that CPS should be compensated for its investment in the project and its ownership stake if it withdraws.

Cedillo said the agreements state that the partners are tenants in common with a 50 percent stake each. This form of ownership, under state law, guarantees CPS’ "undivided interest" in the project even if it withdraws, he said.

This, Cedillo told the court, could lead to some kind of diluted interest for CPS if NINA continues with the project, and eventually to a partition of some sort where CPS is compensated for the value of its stake.

Currently, the project is worth at least $2 billion because of the engineering, permitting work and infrastructure, CPS claims.

In NINA’s case, attorney Greg Coleman argued that the agreements show that a partner that pulls out gets nothing. This leaves the remaining partner with the choice to pull out as well or carry on and take on all the risk and potential gain.

"That’s how project financing works," Coleman said. "When you make a gamble … that money is on the table and it remains on the table."

NINA has also asked for a change of venue to move the trial out of Bexar County.

Attorney Lamont Jefferson argued that a Bexar County jury is not appropriate to hear the case involving the municipally owned utility because "it’s like a parent trying to discipline its misbehaving children in public."