January 11, 2010 / 10:20 PM / in 9 years

NRG, San Antonio nuclear stand-off continues

* NRG, CPS Energy settlement meeting ends

* Parties suing each other over nuclear expansion plan

HOUSTON, Jan 11 (Reuters) - A meeting between feuding officials of NRG Energy (NRG.N) and the San Antonio municipal electric utility ended Monday with no resolution on the future of a $10 billion proposed expansion of Texas’ largest nuclear facility, the parties said.

San Antonio Mayor Julian Castro last week invited the partners to meet ahead of a court battle scheduled later in January between NRG, its nuclear development arm and CPS Energy which is backing off a plan to invest in two new 1,350-megawatt reactors due to rising cost projections.

CPS Energy is a 50-50 partner with Nuclear Innovation North America (NINA), a partnership between NRG and Toshiba Corp (6502.T), in the expansion of the South Texas Project. The expansion has been an early mover in the revival of the U.S. nuclear industry and a front-runner to obtain federal loan support.

According to media reports, Jelynne LeBlanc-Burley, acting general manager of CPS Energy of San Antonio, left Monday’s meeting, noting that top NRG executives David Crane and Steve Winn did not participate.

In a statement, LeBlanc-Burley called NRG’s lawyers at the meeting “very uncooperative.”

NINA officials said settlement talks began in Washington last Thursday with a team of senior executives.

“We are continuing those same discussions with the same team in San Antonio today,” said NINA spokesman Dave Knox.

“This is not about senior leadership being in the room but about commitment to get results in complex negotiations,” Knox said.

LeBlanc-Burley said the utility would like to see a “reasonable resolution” but not “a one-sided deal for the benefit of NRG Energy, NINA and their investors.”

Friction between the partners over disclosure of the project’s cost led to legal action last month.

CPS, which seeks clarification of its rights to withdraw from the project, claimed in its lawsuit that NRG has hurt the utility’s ability to sell a stake in the project. CPS seeks $32 billion in damages, according to court documents.

NRG is concerned that ongoing uncertainty about CPS participation jeopardizes the project’s chance to obtain a crucial federal loan guarantee.

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

NRG has said other parties are interested in investing in the project and it can move forward at whatever level CPS chooses to take. (Reporting by Eileen O’Grady; editing by Jim Marshall)

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