Texas mayor wants meeting between NRG and utility

HOUSTON (Reuters) - San Antonio Mayor Julian Castro on Monday invited feuding partners in the proposed South Texas Project nuclear expansion to meet in an attempt to avoid a costly court battle set to begin later this month.

Castro wants top-level representatives of the city's municipal utility CPS Energy, NRG Energy Inc, its nuclear development unit and Toshiba Corp to negotiate a settlement in a dispute over CPS' involvement in a plan to build two reactors at Texas' largest nuclear power plant.

"It is in the best interests of all involved parties to negotiate a solution that satisfies the business needs of all parties," Castro said in a letter to the parties.

CPS Energy is a 50-50 partner with Nuclear Innovation North America (NINA), a partnership between NRG and Toshiba Corp, to build the new reactors, but rising cost estimates have created friction between the parties that led to legal action last month when CPS sought clarification of parties' rights if either decided to withdraw from the project.

NRG Chief Executive David Crane indicated NRG will meet with other parties in San Antonio.

"The STP nuclear project is a critically important infrastructure project for the state of Texas and the United States of America as well as for the parties directly involved," Crane said in a statement late Monday.

"We are most appreciative of Mayor Castro's leadership in pushing for a speedy and equitable solution that will enable the project to go forward without interruption," Crane said.

NRG is concerned that ongoing uncertainty about the utility's participation in the project jeopardizes the project's chance to obtain a crucial federal loan guarantee and other incentives aimed at reviving the U.S. nuclear industry after a three-decade lull.

The U.S. Department of Energy is expected to announce the first commitment from the $18.5 billion loan program soon.

NINA and CPS planned to spend about $10 billion to have Toshiba build two 1,350 megawatt reactors at South Texas, but unofficial cost estimates of up to $18 billion have worried Castro and other elected officials in San Antonio.

Citing higher costs and their impact on customer bills, CPS said last year it would reduce its ownership in the project.

NRG has said other parties are interested in investing in the project and it can move forward at whatever level CPS chooses to take.

The legal wrangling escalated late last month when CPS claimed NRG, NINA and Toshiba failed to disclose critical cost information and disparaged CPS to hurt the utility's ability to sell a stake in the project. CPS seeks $32 billion in damages, according to court documents.

Castro wants the parties to gather on Monday in San Antonio and to meet "around the clock, if need be" before the pending January 25 trial date.

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