NRG scraps investment plans for Texas nuke plants
HOUSTON NRG had been in a joint nuclear development with the Toshiba American Nuclear Energy Corp. to develop the STP 3&4 nuclear units in South Texas via an initiative called the Nuclear Innovation North America (NINA). But the shaky finances of Tokyo Electric Power Company -- which had expressed an interest in owning 20 percent, or $2 billion, of the final project -- played a large role in NRG's decision to withdraw its investment, sources told Eyewitness News. They are not canceling the projects but are significantly scaling back ongoing planning. "The tragic nuclear incident in Japan has introduced multiple uncertainties around new nuclear development in the United States which have had the effect of dramatically reducing the probability that STP 3&4 can be successfully developed in a timely fashion," President and CEO of NRG David Crane said in a prepared statement. The news does not necessarily mean the project to develop the facilities will end; Toshiba will still seek a loan guarantee and permit from the federal government, Eyewitness News sources said. However, this makes it far more difficult for the project to go forward because unless another investor comes in willing to spend hundreds of millions of dollars, it is in serious jeopardy. NRG said it will continue to fund the projects on a minimum basis in order to maintain and preserve licensing and planning costs in the event the climate for future nuclear energy in the United States changes to the positive but will not invest additional capital in the STP development effort. "We continue to believe both in the absolute necessity of a U.S. nuclear renaissance and that STP 3&4 is the best new nuclear development project in the country bar none. However, the extraordinary challenges facing U.S. nuclear development in the present circumstance and the very considerable financial resources expended by NRG on the project over the past five years make it impossible for us to justify to our shareholders any further financial participation in the development of the STP project," Crane said. NRG expects to record a first-quarter 2011 pretax charge of approximately $481 million, for the impairment of all of the net assets of the Nuclear Innovation North America. The write down consists of $331 million of NINA net assets funded by NRG along with $150 million of net investment contributed by the energy corp. "As previously announced last month, NINA suspended indefinitely all detailed engineering work and other pre-construction activities and, as a result, dramatically reduced the project workforce. NINA, going forward, will be focused solely on securing a combined operating license from the NRC and on obtaining a loan guarantee from the U.S. Department of Energy, two assets that are absolutely essential to the success of any future project development," the company said in a statement. "TANE will be responsible for funding ongoing costs to continue the licensing process. In concurrence with the substantial reduction in NINA's project workforce, and to support NINA's reduced scope of work, NRG expects to incur one-time costs, related to a contribution to NINA, which are not expected to exceed $20 million. These costs will be incurred, and expensed, primarily in the second quarter 2011." NRG Energy, Inc. is a Fortune 500 and S&P 500 Index company that owns and operates one of the country's largest and most diverse power generation portfolios, according to the statement.
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