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"NRG-CPS Energy lawsuit complicates ownership question HOUSTON, Jan 27 (Reuters) - A Japanese electric utility is mulling a stake in a Texas nuclear plant under development by NRG Energy Inc (NRG.N), which is a leading contender for billions of dollars in federal loan guarantees. Tokyo Electric Power Co Inc (9501.T), operator of the world's largest nuclear plant in Japan, is considering taking a stake in the $10 billion-plus project to be built in South Texas by 2016, said a spokesman for the Japanese utility. TEPCO's interest surfaced just as NRG's nuclear development unit and San Antonio utility CPS Energy prepared to square off in court in a dispute over CPS' right to reduce its ownership share or withdraw from the project."

By gaining control of slightly less than half of the outstanding stock in NRG Energy Inc., Exelon Corp. wants to turn a hostile $6 billion takeover effort into a friendly one. The NRG board rejected a proposed merger with the Chicago-based Exelon in November, only to find dissent from shareholders who agreed Tuesday to tender 45.6 percent of their stock to Exelon.

Power giant and utility operator Exelon Corp. said Tuesday that it is taking its all-stock bid of around $6 billion for NRG Energy Inc. directly to shareholders after NRG executives rejected it as being too low. Exelon said it will start the exchange offer Wednesday for all of NRG's shares.

E-mails between Toshiba Inc. and CPS Energy and also among CPS executives make clear that the utility knowingly understated the costs of nuclear expansion to the public. Over a period of months during which CPS officials were telling the public the price for expansion at the South Texas Project was $13 billion, executives knew Toshiba was projecting the cost to be at least $4 billion higher. The same e-mails demonstrate anxiety among CPS officials that NRG Energy - a publicly held corporation that is CPS's partner in the project - intended to reveal the inflated cost estimates. "I think your discussion of incomplete cost estimates in public in November is a major problem," the CPS vice president of power plant construction wrote to an NRG official.

E-mails between Toshiba Inc. and CPS Energy and also among CPS executives make clear that the utility knowingly understated the costs of nuclear expansion to the public. Over a period of months during which CPS officials were telling the public the price for expansion at the South Texas Project was $13 billion, executives knew Toshiba was projecting the cost to be at least $4 billion higher. The same e-mails demonstrate anxiety among CPS officials that NRG Energy - a publicly held corporation that is CPS's partner in the project - intended to reveal the inflated cost estimates. "I think your discussion of incomplete cost estimates in public in November is a major problem," the CPS vice president of power plant construction wrote to an NRG official.

The Wall Street Journal reports that Exelon Corp. (NYSE:EXC) will extend its offer for NRG Energy Inc. (NYSE:NRG) by seven weeks to Feb 25 as a result of having acquired 45.6% or 106.5 million shares since November. NRG's stock closed at $28.62 on Jan 10 making Exelon's stake worth $3.05 billion. The Chicago nuclear giant is planning several new steps to secure control of the New Jersey-based utility. The New York Times reported that Exelon was also considering a proxy fight to force NRG to sell the rest of the company. Exelon reportedly said it would propose its own slate of directors for NRG's board.

Exelon Corporation recently announced it has filed an application with the Federal Energy Regulatory Commission (FERC) for approval of Exelon's proposed combination with NRG Energy, Inc. Exelon has also filed notification with the U.S. Department of Justice and the Federal Trade Commission of its intention to acquire NRG, in compliance with federal premerger notification requirements.

Exelon Corp, the largest nuclear power operator in the United States, made an unsolicited offer to acquire NRG Energy Inc (NRG.N: Quote, Profile, Research, Stock Buzz) for $6.2 billion in stock, in a move to expand geographically and boost earnings and cash flow. The combined company would be the No. 1 U.S. power company, with generating capacity of around 47,000 megawatts, or enough electricity to serve nearly 45 million homes, Exelon said in a statement on Sunday.

"-- NRG Energy Inc. expects to learn in about two months whether it will get a federal loan guarantee needed to build nuclear reactors in Texas, and will scrap the project if it doesn't. NRG will try to sell some of its share in the project if it receives loan-guarantee approval from the U.S. Energy Department, Chief Executive Officer David W. Crane said today in an interview. The company, based in Princeton, New Jersey, is seeking to build two reactors at an existing plant site about 100 miles (161 kilometers) southwest of Houston. "We would like, during the course of 2010, to bring in other investors who not only have a financial interest in the project but who play a critical role in the project's success," Crane said. "It could be other people involved in the construction of the project, it could be people involved in buying the power from the project." "

Nuclear Innovation North America argued in court Wednesday that CPS Energy had refused to pay its portion of January's development costs for the nuclear deal, a move that could kill the project. But later Wednesday, CPS said it would pay its share of January's costs, eliminating one of the many legal points of contention between the partners. "Our sole goal today was to ensure the ability of the STP expansion to continue past Jan. 1, and their decision accomplishes that goal," NRG spokesman Dave Knox said. NINA is owned by NRG and Toshiba Inc.

Nuclear Innovation North America argued in court Wednesday that CPS Energy had refused to pay its portion of January's development costs for the nuclear deal, a move that could kill the project. But later Wednesday, CPS said it would pay its share of January's costs, eliminating one of the many legal points of contention between the partners. "Our sole goal today was to ensure the ability of the STP expansion to continue past Jan. 1, and their decision accomplishes that goal," NRG spokesman Dave Knox said. NINA is owned by NRG and Toshiba Inc.

Spooked by escalating costs, a city-owned utility in San Antonio is considering backing out of a venture with NRG Energy Inc. to build two next-generation nuclear reactors in Texas. CPS Energy is expected to make a final decision next month, after it gets an updated cost estimate from Toshiba Corp., which will oversee construction of the two reactors. The project is one of the furthest along in a new crop of nuclear proposals, but it is proving unpopular with city officials.

Spooked by escalating costs, a city-owned utility in San Antonio is considering backing out of a venture with NRG Energy Inc. to build two next-generation nuclear reactors in Texas. CPS Energy is expected to make a final decision next month, after it gets an updated cost estimate from Toshiba Corp., which will oversee construction of the two reactors. The project is one of the furthest along in a new crop of nuclear proposals, but it is proving unpopular with city officials.

Spooked by escalating costs, a city-owned utility in San Antonio is considering backing out of a venture with NRG Energy Inc. to build two next-generation nuclear reactors in Texas. CPS Energy is expected to make a final decision next month, after it gets an updated cost estimate from Toshiba Corp., which will oversee construction of the two reactors. The project is one of the furthest along in a new crop of nuclear proposals, but it is proving unpopular with city officials.

"The air blowing overhead in the brightly lit courtroom made it hard to hear at times. Overhead projectors illuminated PowerPoint presentations on both sides of the room up front. There were microphones and laptops, too, some plugged into outlets along the walls. And yet, with all the electricity thrumming through, nothing burned up CPS ratepayer dollars faster than the dozen-plus lawyers squabbling over the tattered relationship between CPS Energy and NRG Energy Inc., its co-owner in the floundering attempt to build two new nuclear plants at the South Texas Project. Relationships being what they are, the most consistent comparison made since the dispute broke into the open late last year has been divorce. It seemed too easy at first, but then on Monday, Jelynne LeBlanc-Burley, the new interim general manager at CPS, wondered why my colleague, Anton Caputo, and I sat on the NRG side of the courtroom."

It's come to this: The simple truth withheld from the community by CPS Energy was revealed last week by NRG Energy executives to a Houston gathering of financial analysts: San Antonio can't afford the high price of expanding the South Texas Project nuclear facility. Not that we need another example, but once again Wall Street enjoys the advantage over Main Street. Ratepayers don't have a need to know, but let's not deny institutional investors a little inside information. The project will cost billions more than CPS estimated, even after interim General Manager Steve Bartley went to Japan to seek concessions. Utility executives want until January to bring a new number to Mayor Julián Castro and the City Council. Why wait? What CPS once promised was a good deal for the city is now, clearly, a bad deal. It's a bad deal made worse by utility executives who deliberately withheld critical financial data, thus misleading elected city leaders, the Express-News and the public. Even as we were told the project would cost CPS and NRG a total of $13 billion, utility executives knew Toshiba Inc. was estimating $4 billion more.

It's come to this: The simple truth withheld from the community by CPS Energy was revealed last week by NRG Energy executives to a Houston gathering of financial analysts: San Antonio can't afford the high price of expanding the South Texas Project nuclear facility. Not that we need another example, but once again Wall Street enjoys the advantage over Main Street. Ratepayers don't have a need to know, but let's not deny institutional investors a little inside information. The project will cost billions more than CPS estimated, even after interim General Manager Steve Bartley went to Japan to seek concessions. Utility executives want until January to bring a new number to Mayor Julián Castro and the City Council. Why wait? What CPS once promised was a good deal for the city is now, clearly, a bad deal. It's a bad deal made worse by utility executives who deliberately withheld critical financial data, thus misleading elected city leaders, the Express-News and the public. Even as we were told the project would cost CPS and NRG a total of $13 billion, utility executives knew Toshiba Inc. was estimating $4 billion more.

Facts about Exelon and NRG Energy. Exelon made an unsolicited $6.2 billion all-stock bid for NRG Energy. EXELON: _ Nation's top nuclear power operator with 17 reactors, representing approximately 20 percent of the U.S. nuclear industry's power capacity. _ Has 5.4 million election customers in northern Illinois and Pennsylvania. Also has 540,000 natural gas customers in the Philadelphia area. _ Reporting profit of $2.7 billion, or $4.06, from continuing operations on revenue of $18.9 billion in 2007. _ Based in Chicago.

"Nuclear Innovation North America looked to score a quick knockout Monday as the massive nuclear lawsuit filed by CPS Energy got under way. 408th District Court Judge Larry Noll was expected to announce Tuesday whether the tactic worked. NINA, which is being sued by CPS over the teetering proposal to build two more reactors at the South Texas Project, asked Noll for a summary judgment, a move that would give NINA a victory in the first phase of the case. NINA, which is a partnership between NRG Energy and Toshiba, contends that CPS should lose the roughly $350 million it has invested in the project and its ownership rights if it withdraws. Its attorneys argued an abbreviated version of the case Monday. "It is pretty clear that NRG is intent on trying to convince a judge that our customers should lose all of their investment," said CPS acting General Manager Jelynne LeBlanc-Burley, adding that she still holds out hope for a settlement. CPS is suing NINA for $32 billion, claiming the company pulled CPS into the deal by making fraudulent claims and then orchestrated a misinformation campaign through the media to force CPS out."

"A critical court ruling today rang the first chime in what could be the death knell of the so-called "nuclear renaissance," starting with the failed expansion of the South Texas Project (STP). This afternoon's ruling by 408th District Court Judge Larry Noll that CPS Energy can safely withdraw from the proposed STP expansion project without losing all its investment offers the utility and the city of San Antonio the cue they've been waiting for to exit the national nuclear stage. Combined with the NRG Energy CEO's announcement during a shareholder and press conference call this morning that NRG would "wind down the project as quickly and economically as possible" if CPS withdraws or STP does not receive federal loan guarantees, this news marks a major blow to those who claim nuclear power is a viable alternative to fossil fuel energy. The expansion project calls for two new nuclear reactors at a site with two existing reactors."

"CPS Energy's board of trustees has approved the proposed $1 billion settlement with Nuclear Innovation North America and NRG Energy Inc. The board's decision clears the way for the development of two nuclear reactors at the South Texas Project (STP) in Matagorda County, Texas. Nuclear Innovation North America (or NINA) is the nuclear development company jointly owned by NRG and Toshiba Corp. NINA is the developer of the expansion project. CPS Energy's management and NINA reached the proposed settlement back on Feb. 17. However, the utility's board of trustees still needed to sign off on the deal. "With this agreement NINA and CPS Energy can now go forward to develop nuclear energy for San Antonio's future energy needs," says CPS Energy Chairman Charles Foster. "This is a good and fair settlement for both parties.""

When visitors traipse through the two nuclear power plants at Bay City, the spent fuel pool is as sure a stop as the Alamo is on the Gray Line Tour. A ladder emerges, and visitors are encouraged to climb it. And so they ascend, one by one, and peer into a 26 x 52-foot pool. The pool - less than a third the dimensions of an Olympic-sized swimming pool, although it's deeper - contains used, radioactive uranium rods, stored beneath 20 feet of water. You can't see much from the top of the ladder, but the message is clear enough: See how small it is? In doing so, however, visitors peer into one of the deepest issues surrounding nuclear expansion - what to do with material that will stay extremely hazardous, according to the U.S. Department of Energy, for tens of thousands of years. It's a challenge the plant's operators, and those who want to build two new nuclear plants there, say has been settled to their satisfaction. "We're in a very good position down there to manage the waste at the site," David Crane, CEO of NRG Energy, one of the partners in the proposed South Texas Project expansion, said this week. NRG would continue to store spent fuel in the pool, then convert it to dry storage. That involves encasing it in concrete on-site. Adding two plants would increase the amount stored, but plant officials say they can do it safely.

Exelon is not seeking new merger targets in the near term after its failed bid to acquire NRG Energy, Exelon Chairman and CEO John Rowe said on a July 24 conference call to discuss Exelon's second-quarter earnings. Market power issues would rule out any deal with another independent power producer while regulatory issues would likely hamper any merger with most acceptable utilities, he said. Rowe also said Exelon will not be building any new nuclear power plants, believing that uprating the power capacity of its current 17-unit nuclear fleet is a better value. The company last month postponed indefinitely its plans to build two new nuclear units at a greenfield site in Victoria County, Texas and announced plans for up to 1,500 MW of nuclear upgrades over the next eight years. Uprates for current nuclear units cost about half as much as building a new plant and the execution risk is "substantially lower," Rowe said. Exelon on July 24 announced second-quarter income of $657 million, down from $748 million in second-quarter 2008.

The Department of Energy has narrowed the list of proposed new nuclear power plants it is considering for $18.5 billion in federal loan guarantees down to four from five, a spokeswoman said. "We have proceeded to due diligence with four applications for nuclear loan guarantees that are farthest along in the [Nuclear Regulatory Commission] application process," the spokeswoman said. "We have not made any final decisions and have not eliminated any of the applicants." New reactors at Southern Co.'s (SO) Vogtle plant in Georgia, Scana Corp.'s ( SCG) Summer plant in South Carolina, Constellation Energy Group's (CEG) Calvert Cliffs plant in Maryland and NRG Energy Inc.'s (NRG) South Texas plant are among the projects still in the running for federal loan backing. Under the loan guarantee program, the government promises to assume the companies' debt obligations if they default on loans for the nuclear projects.

"The judge overseeing CPS Energy's nuclear lawsuit frustrated lawyers for Nuclear Innovation North America on Wednesday as they tried to introduce evidence they said would show that utility executives knew they'd lose their investment if they withdrew from an expansion of the South Texas Project nuclear plant. State District Judge Larry Noll denied attorneys for NINA and parent company NRG Energy the ability to offer anything outside the actual language of the contracts to be submitted. CPS attorney Ricardo Cedillo wants Noll to rule that the utility has the right to withdraw from the project and that it will have no further financial obligations if it does - but would continue to own and control a 50 percent interest as a "tenant in common" with NINA."