DALLAS — A court case that threatens plans for the first nuclear power project in more than three decades headed for trial after a Texas district judge in San Antonio ruled that the lawsuit by the city’s CPS Energy utility could go forward.
At issue is whether CPS has the right to withdraw from the $13 billion project without losing its investment with privately held NRG Energy and its subsidiary, Nuclear Innovation NA.
In a court filing designed to derail the suit, NINA and NRG asked Bexar County District Judge Larry Noll for a summary judgment. NINA, a partnership between NRG and Toshiba Corp., contends that if CPS were to withdraw from the project, it would lose its entire interest in the project.
CPS Energy filed suit last month to clarify the roles and obligations of the 50-50 partners if either decides to withdraw. The municipal utility has made no decision to withdraw from the proposed addition of two nuclear reactors to the South Texas Project but has claimed that it was deceived by NINA and NRG and is seeking damages of $32 billion.
NRG countersued, claiming the public utility should lose more than $370 million invested so far and lose all value in the project’s land and water rights.
In favoring CPS in Monday’s ruling, Noll took a significant stance in favor of CPS’ arguments by ruling that the partners are “tenants in common” under Texas law, meaning that each partner is understood to own separate and distinct shares.
“We are pleased with the ruling, as NRG has tried every maneuver to get this case out of court,” Carolyn Shellman, CPS executive vice president and general counsel, said in a statement. “The judge has asked us to continue to negotiate, and we continue to make ourselves available to that, and have for several weeks now. However, we are prepared for the opportunity to go to trial to completely explain our case.”
In a letter to CPS’ leadership Monday, NRG chief executive David Crane warned that the “dispute between CPS and us poses a serious threat to derail the project. To solve this problem, our preferred approach has been — as it is in all matters — to negotiate rather than to litigate.”
The legal issues have undermined a proposed project announced with national fanfare on June 19, 2006. The partners filed a letter of intent with the Nuclear Regulatory Commission to build two reactors at the current South Texas Project on the Gulf Coast in Matagorda County. On Sept. 4, 2007, NRG filed a full application to build two Toshiba Advanced Boiling Water Reactors, the first submitted to the NRC since 1979.
Since then, Austin, one of the original partners in the South Texas Project, has declined participation in the STP expansion. That left CPS, which so far hasn’t sold any long-term debt for its share, with a 50% stake in the project with NRG. Since then, CPS has claimed that NINA fraudulently withheld information concerning costs of the project, and the utility’s former general manager, Steve Bartley, was replaced amid an investigation into why the higher costs were not reported to the CPS board.
In his letter to CPS, Crane wrote that NRG’s only motivation was to take advantage of a 2005 law that streamlined the process for nuclear power permitting and provided additional financial incentives. Hhe said the project ultimately would benefit both partners and the state of Texas.