Bay City Tribune

NRG's addition of STP units 3&4 is now one of five projects nationwide - narrowed from about 14 last year - chosen to compete for $18.5 billion in government-backed loans to build new nuclear plants.

That is great news for NRG, which owns 44 percent of STP, because it recognizes the hard work that went into the planning for the two new reactors and it means the plant is a lot closer to U.S. Energy Department loan backing in the first round of nuclear plant building in more than 30 years, David B. Knox, communications manager with NRG Energy, said Friday.

The DOE short list also includes Texas' other nuclear plant, TXU's Comanche Peak near Fort Worth, Unistar Nuclear's Calvert Cliffs 3 reactor in Maryland; and SCANA Corp/Santee Cooper's two-unit expansion at the Summer station in South Carolina.

DOE's next step will be to evaluate the technology to determine which project can best meet the country's needs for building a new nuclear facility and getting it online in the quickest time possible - with the least risk to the government, the sponsors or the ratepayers.

With a cost of $5 billion to $12 billion for each new reactor, depending on size and design, the DOE program is expected to fund only a few projects, but the guarantee is seen as critical to obtaining financing.

The DOE process will determine which new reactors get built, NRG Chief Executive David Crane said last week, Reuters reported.

"Only two or three projects will qualify. We fully expect to be one," Crane said of the $8 billion South Texas expansion.

"We worked hard for one of the strongest projects," Knox said.

Making DOE's short list, he added, means "they have seen our strengths."

Those strengths include STP's "outstanding site" - originally designed for four reactors with area for growth and with state permits assuring adequate water supplies.

In addition, Knox said South Texas Project Nuclear Operating Company (STPNOC) has proven itself "time and time again for operating the plant safely, efficiently and effectively."

Another big plus for STP units 3&4 is that when NRG filed to build the two new reactors in 2007, the company said it was going with fully engineered - and already in use - Advanced Boiling Water Reactors (ABWR) built by Toshiba.

Compared to other proposed nuclear plant expansions, the proven ABWR technology avoids "first-of-kind issues" that impact companies using new reactor designs, Knox points out. With its previously tested technology STP is in a significantly better position to have units 3&4 online sooner.

A milestone event for STP, he said, is the engineering procurement construction (EPC) agreement between NRG and Toshiba because it guarantees costs, scheduling and performance of the reactors once units 3&4 are built.

Energy Secretary Stephen Chu has said he will move quickly to get the loan guarantee program up and running this year.

In another NRG news development last week, the company last week filed an intervention and protest with Federal Energy Regulatory Commission (FERC) relating to Exelon Corp.'s proposed hostile takeover of the company.

NRG has requested that FERC find Exelon's application deficient and seek additional information.

By filing with FERC, NRG preserves its ability to raise issues in opposition to Exelon's proposed transaction in the future to ensure it serves the public interest and offers full and fair value for NRG's shareholders.

In addition, NRG's filing contends:

Exelon's FERC application is premature and processing it would be an inefficient use of FERC's resources, since there is no deal to approve at this time. California has already rejected Exelon's application on similar grounds.

Exelon has not adequately addressed issues regarding its market power, the effectiveness of its proposed divestiture plan, or the impact of the transaction on its cost-of-capital and its transmission and distribution rates.

Because NRG has not agreed to key elements of the transaction - notably the proposed divestiture plan - these elements are subject to change and the current Exelon application should not be approved by FERC.

Exelon itself has publicly admitted that its proposed hostile transaction is an attempt to apply pressure on NRG's bard of directors to force a different transaction.

Information for this story also came from Reuters.com.