REFILE-CERAWEEK-Texas nuclear project sees loan decision in Q2

* Lawsuit settlement puts Texas reactors back on track

* Loan support critical to South Texas Project expansion

(Refiles to clarify lead)

HOUSTON, March 12 (Reuters) - The chief executive of Nuclear Innovation North America LLC (NINA) said on Friday he sees a decision on a critical loan commitment for the South Texas Project from the U.S. government in the second quarter after settling a lawsuit with one of its partners.

The NRG Energy Inc NRG.N joint venture with Toshiba Corp 6502.T last month settled an ownership dispute with its partner CPS Energy, the municipal utility of San Antonio, over the $10 billion development of two nuclear reactors in Texas, giving the project a second chance.

In February, President Barack Obama awarded the first nuclear loan guarantee of $8.3 billion to a group led by Southern Co SO.N to build a nuclear plant in Georgia as part of the administration's plan to reduce dependency on foreign oil, create jobs and cut greenhouse gas emissions.

That leaves the Department of Energy with three projects on its loan guarantee short list -- the South Texas Project expansion, Constellation Energy Nuclear Group LLC's Calvert Cliffs expansion in Maryland and SCANA Corp's SCG.N Summer project in South Carolina -- and about $10 billion remaining in its budget.

NINA CEO Steve Winn said the lawsuit may have shifted momentum to other loan candidates but has not damaged the Texas project’s relationship with regulators and other partners.

“We are hopeful,” Winn said in an interview at the CERAWeek conference in Houston. “We are doing everything we can to get this done.”

With the agreement with CPS Energy, Winn hopes to get a loan commitment from the DOE under the existing budget allocation, rather than waiting to see if the administration’s proposal to increase the loan guarantee budget to $54 billion becomes a reality.

“If Constellation gets the next guarantee, we will have to evaluate our strategies,” Winn said.

Under the agreement with CPS Energy, NINA’s interest in the two new reactors climbs from 50 percent to 92.375 percent, leaving CPS with a 7.625 percent, or about 200 MW of capacity.

NINA will pay for future development costs and pay CPS $80 million only if the project obtains a loan guarantee.

Winn said NINA is talking to other potential partners to replace the ownership percentage CPS dropped. NINA wants to limit its ownership stake to the 40 to 50 percent level.

“This is the year to create a lot of cost certainty,” Winn said, by nailing down costs for some equipment and labor and finding buyers to sign long-term contracts for electricity for the new reactors, expected to come online in 2016 and 2017. (Reporting by Eileen O’Grady; Editing by Marguerita Choy)