NRG wants CPS decision on new South Texas reactors

NEW YORK (Reuters) - NRG Energy Inc's nuclear development partnership wants San Antonio's CPS Energy to decide whether it is in or out of the planned expansion of the South Texas nuclear power plant to help keep the project's place in line for federal loan guarantees.

The CPS municipal utility is a 50-50 partner with Nuclear Innovation North America (NINA), a partnership between NRG and Toshiba Corp, to build two new reactors at the South Texas nuclear plant.

"Time is of the essence in making the determination of whether CPS Energy is in or out of the project," said Steve Winn, CEO of NINA, in a release late Wednesday.

"The Department of Energy is only going to select two projects for loan guarantees. STP was number one and now is second with another project close behind. Further delays could move STP to third place, losing the loan guarantee and reducing the value of both parties investment to zero," Winn said.

The U.S. Department of Energy has the authority to dole out $18.5 billion in loan guarantees to jump start construction of the first new nuclear plants since the Three Mile Island accident in 1979.

NINA and CPS planned to spend about $10 billion to have Toshiba build two 1,350 megawatt reactors at South Texas, but a spate of higher cost figures leaked in October made some officials in San Antonio, which gets 14 percent of CPS' revenue, question the project's cost and its impact on customers' bills.

Citing the higher cost estimates, CPS said it would reduce its ownership in the project and earlier this month, the municipal utility filed a lawsuit against NINA to clarify the partners' liability if either tries to withdraw from the venture.

Both NRG and CPS have said they are looking for partners to help fund the new units.

The lawsuit escalated late Wednesday when CPS amended its filing, claiming NRG, NINA and Toshiba failed to disclose critical cost information and disparaged CPS to hurt the utility's ability to sell part of its stake in the nuclear project. CPS seeks $32 billion in damages, according to court documents.

Winn denied the allegations in a statement Thursday.

"The petition is filled with silly conspiracy theories, unfounded accusations and personal attacks," Winn said.

Despite the legal wrangling, both sides said they would favor a settlement to avoid lengthy litigation.

While the cost of new nuclear may not fit in the CPS rate structure, NINA said it believed the cost would continue to move lower and be very competitive to meet future demand.

"There are a variety of options available that would protect CPS from losing its investment and help meet San Antonio's future need for electricity, should the utility decide to pursue a strategy other than full participation in the project," Winn said.

Southern Co, Constellation Energy Group Inc, NRG and SCANA Corp have projects on the short list for federal financing. An announcement could come before year end.

(Reporting by Scott DiSavino and Eileen O'Grady; Editing by Christian Wiessner)