NRG nuclear expansion plans could fizzle
SAN ANTONIO, TEXAS - Texas' chances of getting a new nuclear power reactor look bleaker than ever.
NRG Energy chief executive David Crane said that he's willing to walk away from plans to build two new reactors in South Texas if a deal to jointly share costs and ownership with the City of San Antonio unravels.
He didn't nuke the expansion, but he didn't sound hopeful.
The San Antonio municipal utility sued NRG for $32 billion. Crane said he expects the judge will give an opinion soon. At issue is whether NRG's expectations that the reactors will cost $10 billion is realistic, and whether San Antonio can withdraw from the project without losing its ownership rights.
"We have no illusions about the likely outcome," Crane said. If San Antonio is allowed to withdraw from the expansion program, and not share any more of the costs, but still retain a 50 percent ownership stake, the new reactors won't be built.
"It should be obvious to all that NRG will not be willing to fund 100 percent of costs going forward," Crane said in a conference call with analysts. "We absolutely will not agree to any resolution that we cannot afford or which exposes the project to the same development risk" it's suffered from over the past few months.
Should that happen, NRG would take a $400 million charge, he said.
The problem with reviving the program at this point is timing. Crane developed the investment strategy around gaining federal loan guarantees. Without loan guarantees, he said, he can't build the reactors.
NRG has advanced to the final round of the Department of Energy's competition for the guarantees, but the lawsuit by CPS puts NRG's progress on hold. Meanwhile, other competitors continue to develop their plans.
The longer the DOE takes to decide whether to grant the NRG project loan guarantees, the longer Crane has to work out a solution. But he said he doesn't know when the feds will choose winners.
"As long as this thing is going on... I wake up every day thankful that the DOE is taking their time," Crane said.
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