UPDATE 1-Utility seeks clarification on NRG nuclear pact

(Recasts, adds NRG comment, detail)

HOUSTON Dec 7 (Reuters) - NRG Energy Inc (NRG.N) officials said they were "perplexed" by legal action taken by partner CPS Energy of San Antonio seeking to "clarify" the utility's liability should it try to withdraw from a joint venture to build two new nuclear reactors in Texas, NRG said on Monday.

The San Antonio municipal utility said it filed a petition in state district court late on Sunday "to clarify the roles and obligations" of CPS Energy, a 50-50 partner with NRG through Nuclear Innovation North America (NINA), which includes NRG and Toshiba Corp (6502.T)

NINA is developing a two-reactor expansion plan at the South Texas Project, Texas' largest nuclear station, expected to cost more than $10 billion.

Over the past several months, San Antonio city leaders have expressed increasing concern about the nuclear project's cost and impact on future electric rates in the city.

Problems between the city council and its independent municipal utility escalated in October when word leaked that an estimated price tag for the two reactors had risen by $4 billion.

"We are perplexed by CPS' legal action as we had come to San Antonio today to discuss options for preserving the value of CPS' investment in STP 3 and 4," said NRG spokesman Dave Knox. "Over the past few weeks we have repeatedly expressed our willingness to engage in a dialogue designed to protect that value while maintaining the forward momentum" of the project.

In October, the utility board responded to city council concerns by reducing its stake in the project to 20 percent to 25 percent to more closely match the city's need for future power.

The CPS petition specifically asks the court to define the liability of both parties should either decide to withdraw from the project, CPS said in a release.

"CPS Energy will continue to honor obligations as an owner in the South Texas Project, but to honor those obligations, there can be no ambiguity in the current agreements for us to protect CPS Energy customers," said Jelynne LeBlanc-Burley, CPS acting general manager.

NRG executives said last month that NINA is working to reduce the "overnight" cost of the two new units to less than $10 billion from a $12.1 billion estimate from Toshiba in July.

Knox said NRG officials "remain hopeful" for a satisfactory outcome for all parties, while adding that the litigation limits NRG's ability to communicate with its partner.

NRG Chief Executive David Crane told analysts last month that the company was prepared to move forward with the project at whatever level of investment San Antonio chooses.

NRG and CPS Energy are the largest owners of the existing two-unit STP station located in Matagorda County, about 200 miles (322 km) southeast of San Antonio..

CPS officials declined further comment on the lawsuit. (Reporting by Eileen O'Grady; Editing by David Gregorio and Carol Bishopric)