Toshiba to update Texas nuclear cost by year end

HOUSTON, Nov 16 (Reuters) - Officials with San Antonio’s municipal utility CPS Energy said on Monday that Toshiba Corp officials pledged to provide a “new, lower cost estimate” to build two nuclear reactors in Texas by year end.

Executives from CPS Energy and NRG Energy NRG.N met last week in Tokyo with counterparts from Toshiba Corp 6502.T and Flour Corp FLR.N to discuss the potential price tag for two 1,350-megawatt reactors proposed at the existing South Texas Project (STP) nuclear plant in Matagorda County.

CPS Energy, the largest U.S. municipally owned utility selling both power and natural gas, is a 50-50 partner in the project with an NRG-led joint venture that includes Toshiba.

The utility’s interim general manager Steve Bartley told the CPS board his message to Toshiba was that a cost estimate exceeding $13 billion was not acceptable and that the utility will look at other alternatives.

“We explained that our customers come first and that the board will seek the most reliable and affordable solution for CPS Energy customers,” Bartley said in a statement.

No specifics from the Tokyo meeting were disclosed at Monday’s briefing to the CPS board, sources said.

The CPS board voted last month to reduce its 50-percent stake in the nuclear expansion to align its ownership stake to the city’s future need for additional generation by 2020.

When reports of a $4 billion increase in the project’s cost estimate surfaced, a rift developed between the utility and city leaders. San Antonio’s city council postponed a bond issue vote to support the utility’s nuclear development effort.

While waiting for a new cost estimate, the CPS board directed the staff to update the utility’s electric forecast and to look at all options -- including natural gas, renewable energy and conservation -- to meet the projection.

“A cost estimate that exceeds our preliminary total project cost of $13 billion is not acceptable and will result in CPS Energy exploring other options,” Bartley said in a release last month.

“We want to keep all our future energy options open,” Bartley said in a statement after the trip to Japan.

CPS wants its share of the nuclear expansion to boost customer bills by no more than 5 percent every other year.

The actual cost to build the reactors won’t be determined until nuclear regulators issue a license to proceed with STP 3 and 4 which is not expected until 2011.

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, which is located near Bay City, about 200 miles (322 km) southeast of San Antonio.

NRG and San Antonio are the largest owners of the existing two-unit STP station, Texas’ largest nuclear power plant. (Reporting by Eileen O’Grady; Editing by Christian Wiessner)