NINA TEXAS 3 LLC and NINA TEXAS 4 LLC, Defendants. THE CITY ...

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Thus, in April 2006, NRG South Texas LP (the predecessor in interest to the NINA Companiesas to the Project) discussed with the other participants in the South Texas Nuclear Project itsdesire to develop the additional generating units 3 and 4. Those discussions culminated in theexecution of the Supplemental Agreement with CPS Energy. On the day the agreement wasexecuted, the board of CPS Energy authorized CPS Energy to enter into the SupplementalAgreement and in so doing committed CPS Energy to participate in the entire Project and to fundits proportionate share of the Project’s costs. The parties expressly agreed that the SupplementalAgreement was a binding contract. (Supplemental Agreement § 12.2).11. Notably, the Supplemental Agreement specifically obligates CPS Energy to thefull development of the Project - it states, °’the Parties have agreed ... to license, design,construct, own and operate the Project." (id. §2) In addition, the Supplemental Agreementrequires CPS Energy to "cooperate in... the development of Units 3 and 4" (id. §6.2), and to"give notice" to the NINA Companies in the event it decided that "it will cease participating inthe development of the Project" (id. §5.3). In addition, the parties expressly "agree[d] to executea final agreement to memorialize all of the terms of the Parties’ joint participation in theProject." (Id. {}2.)Agreed Construction Schedule12. After executing the Supplemental Agreement, the Counterparties began workingon a Project schedule. Agreeing to a preconstruction and construction schedule is crucial in thedevelopment of any nuclear power facility. Once agreed, the schedule drives the funding needsover the life of the project. Early in the Project’s development, CPS Energy and the NINACompanies, as co-owners, devoted months in negotiations aimed at agreeing to such apreconstruction schedule and associated costs. These negotiations ultimately led to an agreementDEFENDANTS’ ORIGINAL ANSWER TO PLAINTIFF’ S ORIGINAL PETITIONAND DEFENDANTS’ COUNTERCLAIM PACE 4
to fund $2.4 billion in costs for engineering, infrastructure, and other tasks that were required tobe performed before the Project owners issued "Full Notice to Proceed," or "FNTP," to the primeconstruction contractor, Toshiba. Put simply, the issuance of FNTP initiates construction. Taskschedules were prepared based on this pre-FNTP amount, and corresponding payments wereanade by CPS Energy and N1NA for completion of those tasks. In or around September 2008,CPS Energy and the NINA Companies reaffirmed their mutual agreement to fund the $2.4billion in pre-FNTP costs in connection with an amended construction schedule. Until recently,both CPS Energy and the NINA Companies have in fact been funding their proportionate shareof all pre- FNTP costs. Nothing in any of the pertinent controlling agreements allows eitherparty to avoid their mutual obligation.DOE Loan Guaranty13. The Project is not financially viable without securing a loan guaranty from theU.S. Department of Energy (the "DOE"). Thus, in July and October 2008, both the NINACompanies and CPS Energy submitted applications for loan guarantees of several billion dollarsto the DOE. There is a limited volume of loan guaranty funding available from the DOE and theNINA Companies are competing against many other new nuclear generation projects to securethese guaranties. The stability and timeliness of any project are critical elements that the DOEconsiders in determining which two or perhaps three of the many competing projects should begranted the limited loan guaranties. The parties have known for some time that the DOE waslikely to make its loan guaranty selections in early 2010. In fact, the DOE very recentlyannounced, on December 18, 2009, that it is in the "final stages" of awarding loan guarantees tonew reactor projects, and that it expects "to make an announcement very soon.’’l The DOE alsoaSee Rob Pavey, "Voglte reactor project could get $3.4 billion" reported in the Augusta Chronicle, December 18,2009: http://chronicle.augusta.com/stories/2009/12/19/met 560124.shtml, last visited December 21, 2009.DEFENDANTS’ ORIGINAL ANSWER TO PLAINTIFF’S ORIGINAL PETITIONAND DEFENDANTS’ COUNTERCLAIM PAGE 5
Page 1 and 2: THE CITY OF SAN ANTONI~FE~ [D§ IN
Page 3: time, the NINA Companies have remai
Page 7 and 8: contractor on the Project, informed
Page 9 and 10: withdraws. In fact, there is no amb
Page 11 and 12: as to how this uncertainty could po
Page 13 and 14: Accordingly, the NINA Companies see
Page 15 and 16: 37. The NINA Companies respectfully

NINA TEXAS 3 LLC and NINA TEXAS 4 LLC, Defendants. THE CITY ...

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