Monday, July 6, 2009

NRG Energy

Here's some new information on the proxy contest over NRG Energy, which I discussed briefly a couple of weeks ago.

Although the suitor, Exelon, was passed over in the US government's recent allocation of loan guarantees ($18.5 billion worth of them) for the next generation of U.S. nuke power plants, NRG is on the list of those receiving said guarantees, which is one good reason why it is a pearl worth sea-diving to acquire.

Exelon's first bid, last fall, valued NRG at $6.2 billion. It has since sweetened that (as of last week) to $7.7 billion, which it says is its final offer.

NRG says simply what it has to say in such a situation. It is aware of the new sweetened offer, and "NRG shareholders are advised to take no action at this time pending the review by NRG's Board of Directors."

What's this "next generation" stuff,. though? Isn't that the series with Captain Picard?

No, as I understand it, there have been three "generations" of reactor so far. There were the prototypes of the 1950s and early 1960s, a time of great "Atoms for Peace" enthusiasm.

The Gen 2 reactors were the early commercial plants, the sort all the shouting was about back in the days of a Jane Fonda movie and the Three Mile Island scare. They were designed for 40 years of operation, extendable to 80.

The Gen 3 reactors so far constructed at in Japan -- others have been approved for construction in europe, though no shovels have been filled with dirt there yet. They are designed for 60 years of operation, extendable to twice that.

A move to Gen 4 in the US would of course involve leapfrogging Gen 3 entirely. That seems to be the goal. And as I've said, NRG is on board. Exelon wants to get onto that team by buying NRG.

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