Feb. 4, 2011

Nora Ankrum
Naked City -Austin Chronicle

After months of preliminary talks, New Jersey-based NRG Energy has made an official proposal to Austin Energy regarding a nuclear power purchase agreement from the South Texas Project. AE currently owns a 16% share of the plant; NRG owns 44%. NRG and partner Toshiba plan to build two additional nuclear units and have been shopping for customers to buy the power, expected to come online in 2016. Given Austin’s notoriously rocky relationship with STP – plagued with cost overruns, delays, and much political discord – NRG presumably faces an uphill battle in courting AE. But to sweeten the deal, NRG has offered to partner with AE on a "renewable project such as wind or solar." Furthermore, NRG proposes to "acquire" from AE a power source rivaling STP in controversy: AE’s 50% share in the coal-powered Fayette Power Project. NRG exec Juan Garza says the deal would reduce AE’s carbon footprint by 70% and provide capital allowing the utility to delay expected rate increases. But as Public Citizen’s Tom "Smitty" Smith points out, while the offer might take the plant off AE’s hands, it would not wipe them clean: "We will totally lose control over [FPP], and our ability to reduce generation to prevent pollution episodes or to reduce our carbon footprint will be lost," he said. Meanwhile, he continued, AE could lose out financially in the long run: "We’re going to pay and pay and pay on a fixed-price contract regardless of what happens to the electric market." See NRG’s full proposal.

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