Smaller nuclear project share for San Antonio

14 October 2009

The utility serving the US city of San Antonio will take a 20% stake in two new reactors and maintain its supply of nuclear energy at over one third.


On-site at STP, where CPS Energy has
a 40% stake in two pressurized water
reactors (Image: CPS Energy)
The decision was made yesterday by municipally owned CPS Energy, which developed the project for two new reactors at South Texas Project on a 50-50 basis with NRG.


CPS said it wanted to keep enough equity in the units to give it the supply it needs for its 690,000 customers, but would move to sell the remaining 30%.


According to estimates made in June, CPS's reduced stake of 20% will require around $2.6 billion, some of which the City of San Antonio will this month be asked to raise by issuing revenue bonds. The rest will come from regulated increases to customer bills, which CPS has limited to 5% over five years only.


Both CPS and NRG expect to be able to find parties interested in the remaining 30% - which could entitle the investor to take a corresponding proportion of power from the two 1350 MWe Advanced Boiling Water Reactors planned there. Such a stake would come with a price tag of around $3.12 billion by the same June estimates, but could of course be split between a number of firms. Austin Energy is an equity partner in the first two South Texas Project reactors with a stake of 16%.


Take it to the bridge


When announcing its decision, CPS explained its commitment to renewables and efficiency gains and the need to replace fossil generation, which its Vision 2020 strategy said "poses a disproportionate risk" in a carbon-constrained future.


It said renewables and efficiency "cannot reliably meet San Antonio's growing demand for electricity," whereas "nuclear is likely to generate long-term reductions and savings in fuel costs and currently appears to be the most reasonable generation resource among the realistic alternatives."


The company's interim general manager, Steve Bartley, has previously said that he foresees energy bills rising no matter what route is taken. However, his belief was "it's better to pay some sooner, that is, invest in STP 3 and 4 to avoid paying a lot more in the long run."


Nevertheless, CPS concluded yesterday's statement with: "Nuclear energy is being considered as a bridge to more sustainable methods of electrical production, such as distributed generation."