CPS Stake in Nuclear Plant Could Grow
By Vicki Vaughan, San Antonio Express-News
Feb. 12–CPS Energy could become a 50-50 partner with NRG Energy in an expansion of the South Texas Project nuclear plant if Austin decides not to take the 16 percent ownership stake to which it’s entitled, a key CPS official said Monday.
The Austin City Council may decide this week not to increase its investment in the plant after its city-owned utility, Austin Energy, advised against such a move. The Austin utility said cost and time estimates on the plant were “overly optimistic.”
“It would be convenient to have Austin in, but I don’t know that Austin being out would put us at a big disadvantage,” Mike Kotara, CPS executive vice president of energy development, said Monday. Still, he noted: “The more partners you have in a project, the better off you are. You have more perspectives, and you spread the risk out a little bit.”
Kotara acknowledged that the 2006 cost estimate of $6 billion on the project could be on the low side “because costs are going up.”"Our board is keenly aware” of rising costs, he said.
Yet San Antonio will have the need for another plant that produces electricity in about seven years, and intensive study by CPS indicates that nuclear power may be the least expensive source.
Austin has the right to be a 16 percent stakeholder in the plant’s expansion, the same level of ownership it holds in the plant now. CPS now owns a 40 percent stake in the plant, and NRG, 44 percent.
CPS inked a deal with NRG in October, saying that if Austin decides not to participate, “we are 50-50 partners,” Kotara said. The CPS board hasn’t decided to go forward with the project, but voted last fall to spend $206 million on preliminary design.
In September, CPS joined NRG of New Jersey in filing an application with the Nuclear Regulatory Commission to expand the South Texas Project near Bay City, southwest of Houston. It was the first such application filed since 1978.
Should the Austin City Council on Thursday decide to bow out of participating in the plant’s expansion, “that doesn’t close the book on another partner,” Kotara said. “We wouldn’t be against bringing in a third partner.”
NRG spokesman Dave Knox agreed, saying there’s no reason NRG and CPS couldn’t seek out another company as a stakeholder, but he declined to speculate as to which energy company could step in.
Having a third partner in the plant’s expansion would be a good thing, as long as CPS wouldn’t have to dilute its interest ownership too much, Kotara said.
In a Friday memo recommending that Austin not boost its ownership in the South Texas Project, Austin Energy said to do so would be “imprudent.” Adding two reactors to the plant may cost $1 billion more and take two years longer than NRG’s estimate, Austin Energy said in its memo. NRG has said the two reactors would cost about $6 billion and would begin operations in 2015 and 2016.
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