NRG Energy Cuts Capital Spending On Texas Nuclear Power Project

[jpak]

http://online.wsj.com/article/BT-CO-20100802-707350.html

NRG Energy Inc. (NRG) is slashing spending on two new reactors planned at an existing power plant in Texas as it awaits a decision from the federal government on a loan guarantee for the multibillion-dollar project.

The Princeton, N.J., independent power producer is the second nuclear developer to cut spending on a nuclear project in the last week. Constellation Energy Group Inc. (CEG) announced Wednesday it would reduce spending on a new reactor planned for a nuclear-power plant in Maryland and could completely shut it down by the end of the year if it hadn't received a federal guarantee.

Government support has become a crucial early step for power companies looking to build the first new U.S. reactors in a generation, since federal guarantees would give lenders the confidence to finance the lengthy and expensive projects. The U.S. Department of Energy awarded Southern Co. (SO) a roughly $8 billion guarantee in February for a project in Georgia. Since then, NRG Energy, Constellation and Scana Corp. (SCG) have been competing for the remaining guarantee available under the federal program.

NRG said Monday it would reduce spending on the project to $1.5 million a month. That's down from $7.5 million a month in July and 95% below spending levels in June. NRG's total capital spending on the project for the year is being cut to $186 million from $302 million, the company said during a conference call.

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[kristopher]

1. Nuclear power is not economically viable.

The risk of default is estimated to be between 50-70%, so, no loan guarantee, no financing.