NRG's estimate for Texas nuclear reactors still climbing
NRG says its plans for South Texas will now cost $8 billion

Thursday, March 27, 2008
The Dallas Morning News

NRG Energy Inc.'s estimate of the cost to build two nuclear reactors in South Texas keeps climbing. Last summer, officials with the power plant developer said the reactors at the South Texas Project would cost between $6 billion and $7 billion. Then the estimate moved to $7 billion. On Wednesday, executives said the reactors will probably cost $8 billion.

Blame higher costs for material used to build power plants, such as steel and concrete, and the weak dollar. U.S. companies no longer make some of the massive parts for nuclear reactors, since the country hasn't built nuclear power plants in decades. So NRG must import about 30 percent of the parts for the reactors from Japan.

As the dollar weakens, equipment from Japanese manufacturers costs more.

"There's a total absence of the U.S. supply chain" for nuclear parts, said NRG chief executive David Crane in a conference call with analysts Wednesday.

Mr. Crane described to analysts a deal with NRG's nuclear equipment vendor, Toshiba Corp., to form a power plant development company.

He said the deal settles an important question for the U.S. nuclear industry.

"There's a lot of focus in the analyst community about the cost," Mr. Crane said.

"There's actually a question that has to be answered before the cost, and that's who is going to build these plants."

Some anti-nuclear groups have warned that building a new round of nukes could be very costly.

Some existing Texas nuclear reactors ended up costing more than power companies had expected.

Since the last round of reactors was built, Texas deregulated its power industry.

A nuclear reactor developer can no longer pass along higher costs to consumers in electricity rates.

Instead, NRG must pay for the reactors now and hope to recoup the cost when it sells electricity into the Texas power market in a few years.

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