NRG, CPS Energy meet with Toshiba on nuclear cost

HOUSTON, Nov 12 (Reuters) - Officials with NRG Energy (NRG.N) and CPS Energy, the municipal utility of San Antonio, are meeting with Toshiba Corp (6502.T) officials in Japan this week to get a better grasp of the price tag to build two nuclear reactors in Texas.

A higher cost estimate from Toshiba for two 1,350-megawatt reactors at the existing South Texas Project nuclear plant in Matagorda County has raised concern among city leaders and CPS Energy, a 50-50 partner in the project with an NRG-led joint venture that includes Toshiba.

"We will meet with all our partners in this project and deliver a straightforward message ... It must be affordable for CPS Energy customers," said Steve Bartley, interim CPS manager, in a statement.

Last month, the CPS utility board voted to reduce its stake in the expansion project to more closely match the city's need for future power.

A few days later, when reports of a $4 billion increase in the cost estimate for the project surfaced, the San Antonio City Council put off action on a bond issued needed to support the utility's development effort.

The higher cost estimate from Toshiba was "a starting point for discussion," said NRG spokesman Dave Knox. "We are working with our vendors and owners to lower that number and have already significantly lowered it."

Knox would not divulge the amount of the higher estimate.

"If we thought the final estimate we expect to get in January was that number, we would no longer be spending money against this project," Knox said.

CPS Energy has estimated the cost of the expansion at $13 billion, about $3 billion above NRG's last public estimate.

Bartley and CPS chief executive Milton Lee, along with finance and development officers, traveled to Tokyo on Tuesday with NRG executives to meet with leaders of Toshiba Corp and Toshiba Power Systems, the utility said.

"Our in-depth analyses over the past three years have indicated STP expansion is the best long-term option for reliable electricity, assuming the cost of building STP Units 3 and 4 is within our budget," Bartley said.

CPS has said it wants its share of the project to increase customer bills by no more than 5 percent every other year.

While the Tokyo trip is part of a process to negotiate a final preliminary price tag for the project, the actual cost to build STP 3 and 4 won't be determined until the U.S. Nuclear Regulatory Commission issues a combined construction and operating license for the STP 3 and 4 which is not expected until 2011, Knox said.

Nuclear Innovation North America (NINA), a joint venture formed by NRG and Toshiba, is a 50-50 partner with CPS Energy in the expansion plan at STP, located near Bay City, about 200 miles (322 km) southeast of San Antonio.

NRG and CPS Energy are the largest owners of the existing two-unit STP station, Texas' largest nuclear power station. (Reporting by Eileen O'Grady)