New NRG Texas nuclear units get environmental OK

Reuters Business News
Posted: Mar 18, 2011 2:40 PM
New NRG Texas nuclear units get environmental OK

HOUSTON (Reuters) - NRG Energy Inc's plan to build two new nuclear reactors in Texas cleared an environmental hurdle as the company and its partners continue to work to obtain critical federal loan support.

The Nuclear Regulatory Commission said on Wednesday it found no environmental problems that would preclude the agency from issuing a license to allow the nuclear development venture, Nuclear Innovation North America (NINA), to build and operate two new reactors at the South Texas Project nuclear station in Matagorda County, 90 miles southwest of Houston, the agency said in a release.

NINA, a partnership between NRG and Toshiba Corp, was the first company in nearly 30 years to file an application with the U.S. Nuclear Regulatory Commission in September 2007 to build and operate two new Advanced Boiling Water Reactors, each with an output of about 1,350 megawatts.

NINA hopes to obtain a construction license in 2012 and to bring the new units online in 2016 and 2017.

Issuance of the environmental impact statement "is a very important and positive step in the permitting process and one that shows the strength of the application for this industry-leading project," said NRG spokesman Dave Knox.

Since 2007, U.S. energy companies have filed applications to build more than two dozen new reactors.

With reactor price tags starting at $6 billion and higher, however, many projects have stalled as companies are hesitant to begin the lengthy permitting and construction period without financial guarantees from state and federal agencies.

Falling natural gas prices and revised estimates for future power demand have also forced many developers to delay plans or to trim spending on new reactors.

The South Texas expansion, a leading contender to obtain a loan commitment from the U.S. Department of Energy, recently received conditional approval from the DOE's credit committee. The application is being reviewed by the Office of Management and Budget and the U.S. Treasury Department, officials said.

"We are very pleased that the loan guarantee application for STP 3 and 4 has passed an important milestone in that it is now in the interagency approval process," Knox said.

In addition to an acceptable loan guarantee terms, NINA is also working to find buyers for the output from the new reactors.

Last month, NRG Chairman David Crane told analysts that negotiating long-term power purchase agreements remains "a challenge" while the loan guarantee application is pending.

Tokyo Electric Power Co has agreed to invest $125 million in the Texas nuclear expansion project, but the investment is contingent on DOE loan support.

NINA also awarded an engineering and construction contract for the new reactors to a consortium formed by Toshiba America Nuclear Energy Corp and The Shaw Group.

In February 2010, DOE awarded the first conditional loan of $8.3 billion to Southern Co for a two-unit nuclear expansion project at the Vogtle station in Georgia.

(Reporting by Eileen O'Grady; Editing by Richard Chang)