NRG exits nuclear with sale of South Texas Project stake

02 June 2023

Constellation Energy has agreed to purchase NRG Energy's 44% stake in the South Texas Project (STP) for USD1.75 billion. The plant - located about 90 miles southwest of Houston - comprises two 1280 MWe pressurised water reactors which began providing electricity in 1988 and 1989, respectively.

South Texas Project (Image: NRG)

NRG announced it has entered into a definitive agreement to sell its 44% equity interest in STP to Constellation Energy, "subject to customary purchase price adjustments". Constellation noted that although the transaction is valued at USD1.75 billion, the effective purchase price is USD1.4 billion after taking into consideration the present value of tax benefits to Constellation. It noted the transaction will be financed with a combination of cash and debt.

The transaction is targeted to close by the end of 2023, subject to regulatory approvals by the US Nuclear Regulatory Commission, the Department of Justice and the Public Utility Commission of Texas.

"Today's announcement is the continuation of our strategy to optimise our portfolio while creating significant shareholder value," said NRG President and CEO Mauricio Gutierrez. "The work on this transaction over the last several months will release significant capital to be deployed at value - accelerating and upsizing our current share repurchase programme while achieving our balance sheet targets."

Constellation described STP as "one of the newest and largest nuclear plants in the US" with "an exceptional track record for safety and reliability".

"The South Texas Project is an exceptionally well-maintained plant and its ability to produce resilient, carbon-free energy 24/7 makes it among the most valuable power sources in the world," said Constellation President and CEO Joe Dominguez. "With the potential to run for at least 46 more years with the right policy support, we look forward to working with the South Texas Project's other owners to continue bringing clean, reliable electricity to this growing region for decades to come."

STP is currently owned by NRG (44%), CPS Energy (40%) and Austin Energy (16%). South Texas Project Nuclear Operating Company (STPNOC) manages the plant for its owners, who share its energy output in proportion to their ownership interest.

STPNOC noted it will continue to operate the plant following Constellation's acquisition of NRG's share. "While this is a change in ownership for a portion of the company, STP Nuclear Operating Company's role as the licensed operator of the facility is unchanged," it said.

"We are grateful to NRG for their many years of leadership," said STPNOC Executive Vice President and Chief Nuclear Officer Kym Harshaw. "STP has a very bright future and we look forward to the new relationships we'll be building during the coming transition as we welcome Constellation to our owners group."

Baltimore-headquartered Constellation currently has ownership interests in 13 US nuclear power plants with 23 reactors in total with a combined generating capacity of about 21,000 MWe.

Apart from STP, Houston-based NRG does not own any other nuclear generating capacity.

Researched and written by World Nuclear News