The Nuclear Regulatory Commission (NRC) ruled that a partnership between NRG Energy and Japan’s Toshiba Corp. to build two new ABWR reactors at the South Texas Project (STP) outside Bay City, Texas, through the holding company Nuclear Innovation North America (NINA) continues to be dominated by foreign control. Until NINA can come up with a different corporate ownership structure, the NRC said it could not approve the project’s combined construction and operation license (COL).

The NRC issued the ruling citing the Atomic Energy Act as part of its review of revisions to NINA’s COL application for the two reactors. The Atomic Energy Act stipulates that foreign corporations cannot be granted an operating license for a nuclear plant in the U.S.

"The staff has determined that Toshiba, a Japanese corporation, through Toshiba American Nuclear Energy Corporation (TANE), its American subsidiary, is the sole source of financing for NINA," the NRC wrote in an April 29 letter to NINA CEO Mark McBurnett. Although TANE owns only about 10% of NINA, "its overwhelming financial contributions give it significantly more power than is reflected by this ownership stake," the letter says.

NINA is expected to appeal the decision to the commission’s Atomic Safety and Licensing Board (ASLB). While NINA “considers its options,” the remainder of the combined license application review will proceed as scheduled, said the NRC.

The ruling is expected to pose new challenges for the project that remains in limbo. After NRG Energy submitted a COL application for the two new reactors for STP, where it already operates two units, it partnered with Toshiba to found NINA in 2008. In early 2010, however, NINA’s then 50-50 partner in the STP expansion San Antonio municipal utility CPS Energy pulled its investment of about $386 million and reduced its share in the expansion project to 7.6% after a dispute arose concerning preliminary cost estimates to build the two new units. NINA held the remaining 92.4% share of the project.

Meanwhile, NRG retained its 88% share of NINA while Toshiba held the remaining 12%, and the holding company refocused on obtaining a COL from the NRC as well as a loan guarantee from the Energy Department. It was expected that the Tokyo Electric Power Co.—owner and operator of the Fukushima Daiichi units in Japan—would take a 10% share in the expansion once NINA secured a DOE loan guarantee.

But in the aftermath of the Fukushima disaster in March 2011, NRG pulled financial support for the multibillion dollar expansion, saying the nuclear crisis had "diminished prospects" for that project. TANE has been reportedly lending substantial funds to NINA to continue licensing.

The NRC’s COL review—originally expected to have been completed by 2011—is meanwhile pending resolution of the foreign control issue.

In a similar case, the NRC in March denied a petition from Unistar Nuclear Operating Services to review an ASLB decision that found the company was ineligible to obtain a COL for its proposed—and then abandoned—Calvert Cliffs 3 EPR because it was completely foreign-owned. At the time UniStar’s COL application was filed in 2007, UniStar was a joint venture between Maryland-based Constellation and the French company EDF. In late 2010, EDF bought Constellation’s portion and made UniStar 100% foreign-owned.

Sources: POWERnews, NRC

—Sonal Patel, Senior Writer (@POWERmagazine, @sonalcpatel)