(Reuters) - The U.S. Nuclear Regulatory Commission (NRC) said it would suspend review of the non-foreign ownership requirements of the proposed new reactors at South Texas because Japanese multinational Toshiba effectively controls the project.
Foreign companies cannot control nuclear plants in the United States.
In a letter dated December 13, the NRC said its staff would continue to review the application but would not issue a license until the foreign ownership requirements were met.
The NRC determined Toshiba controls Nuclear Innovation North America (NINA), the company developing the South Texas project.
In 2007, STP Nuclear Operating Co, which operates the South Texas plant for its owners, submitted a combined license application to build two of Toshiba's 1,350-megawatt Advanced Boiling Water Reactors (ABWR) at the plant.
The new reactors were originally estimated to cost about $13 billion, which included financing, but in 2009, Toshiba said the cost could be up to $4 billion more than originally estimated.
There are currently two 1,280-MW reactors operating at South Texas, which is owned by U.S. energy company NRG Energy (44 percent), the City of San Antonio, Texas' CPS Energy utility (40 percent) and the City of Austin, Texas' Austin Energy (16 percent). One megawatt can power about 1,000 homes.
NINA, a partnership between NRG and Toshiba, took over as the lead applicant for the new reactors in January 2011, the NRC said.
In the spring of 2011, NRG however said it would no longer invest additional capital in the development of the new units.
Over the summer of 2011, NINA told the NRC that Toshiba could acquire up to 90 percent ownership of NINA, which the NRC said could give Toshiba an 85 percent ownership interest in the new reactors.
Since NRG will not be investing additional capital in the project, the NRC staff said in its letter, "There is reason to believe that most of the financing going forward will be from Toshiba ... a foreign corporation ... (with the) power to exercise ownership, control or domination over NINA."
The NRC said its staff would hold a public meeting with NINA to discuss the results of its review, if NINA requests such a meeting.
(Reporting By Scott DiSavino)