UPDATE 2-Exelon seeks new nuclear design for Texas project

(Recasts, adds company comment, NRG detail) By Eileen O’Grady

HOUSTON, Nov 24 (Reuters) - Exelon Corp, EXC.N, the country's largest operator of nuclear plants, on Monday said it may drop a promising General Electric nuclear technology for a better-known design that might help its proposed Texas nuclear project attract federal financing,

Exelon’s nuclear unit is talking to other reactor vendors for its proposed new plant near Victoria, Texas, because its initial design choice - the General Electric-Hitachi Economic Simplified Boiling Water Reactor (ESBWR) - is still in its early design phase, according to a release.

Exelon nuclear spokesman Craig Nesbit said the Victoria project came out in the bottom of two tiers in an initial ranking by the U.S. Department of Energy which is prioritizing 19 requests for federal loan guarantees for 14 nuclear projects, many more than the $18.5 billion program can support.

“We believe the Victoria project fell into the lower tier largely because of the uncertainty of the ESBWR design,” Nesbit said.

Exelon said the ESBWR design shows “great promise,” but its development timing “does not meet the needs of our Texas initiative,” said Thomas O’Neill, an Exelon nuclear vice president. A federal loan guarantee will be “critical to the advancement of this project,” he said.

DOE spokeswoman Bethany Shively declined to say how Exelon and other nuclear developers ranked. “We did an initial ranking to help applicants decide if they want to proceed with the cost and effort of a part 2 application,” Shively said. Part 2 of the loan application is due in mid-December.

NRG Energy NRG.N officials declined to say how the proposed two-unit expansion of the South Texas Project nuclear plant fared in DOE's ranking. The 20-year-old South Texas plant is about 70 miles from the site chosen by Exelon.

Exelon is trying to acquire NRG in a $6 billion stock tender being made directly to shareholders after NRG directors rejected the offer, saying it undervalued the company.

Nesbit said Exelon plans to pursue the Victoria project and the South Texas expansion if its hostile bid for NRG is successful.

“Any decision to build (new) reactors will not be based on the acquisition, but on the availability of financing,” Nesbit said. “A combined company will be in far better position to pursue one or both projects than either company alone.”

Three other companies have selected the ESBWR design as U.S. utilities consider a revival of nuclear-plant construction: Entergy Corp ETR.N; Dominion D.N; and DTE Energy DTE.N.

The GE-Hitachi ESBWR is one of four new designs under review by the U.S. Nuclear Regulatory Commission.

GE spokeswoman Elizabeth Kuronen said GE is talking to Exelon about the GE-Hitachi Advanced Boiling Water Reactor design, which already holds NRC certification.

Nesbit said a technology decision for Victoria will be made in early 2009. Exelon will then revise its application for a construction license with the NRC. (Editing by David Gregorio)