Jun. 22--BAY CITY -- The company that co-owns the South Texas Project nuclear power plant wants to double its size with a $5.2 billion expansion.

Saying the move is driven by the state's population boom and the generous nuclear incentives included in last year's federal energy bill, officials with New Jersey-based NRG Energy announced the massive project at the power plant Wednesday morning to a group of local and state officials.

The announcement prompted cries of protest from some advocacy groups around the state who question the safety of nuclear energy, but those assembled at the plant heralded the news as an economic blessing.

"Announcements like this demonstrate that the investment market in Texas supports multibillion-dollar risks," said Paul Hudson, chairman of the Public Utility Commission of Texas.

The plant's current two units, which began operating in 1988 and 1989, produce 2,500 megawatts of electricity, enough to power more than 1 million homes. The new units, which could be online by 2014 and 2015, will more than double that capacity by adding more than 2,700 megawatts.

San Antonio's CPS Energy owns 40 percent of the existing South Texas Project, and Austin Energy owns 16 percent. Officials with NRG, which owns the remaining 44 percent, said they would like the two utilities to partner in the new units, but neither utility would commit Wednesday.

"We'll have to evaluate if more nuclear energy is affordable and if it's compatible with our fuels diversification program," said Jim Nesrsta, CPS Energy's director of nuclear oversight.

Nuclear power currently makes up about a third of CPS' energy production. That's a major reason its rates are the lowest of any of the 10 largest U.S. cities, CPS spokesman Bob McCullough added.

There are 103 nuclear power reactors in the United States producing about 20 percent of the country's electricity. The last nuclear plant was licensed in 1978, the year before the Three Mile Island disaster, but didn't open until 1987.

The South Texas Project is one of two nuclear power facilities in Texas. The other, Comanche Peak, is in Somervell County southwest of Houston.

Hudson said 16 companies around the country have expressed interest in opening 25 new nuclear plants. But he described NRG's proposal as unprecedented because it presented a "risk only to the shareholders, and not to ratepayers in the state."

The nuclear incentives in the 2005 federal energy bill include federally backed loan guarantees and a risk insurance policy to hedge against construction delays due to regulatory changes or litigation. They also include a production tax credit that NRG regional President Steven Winn said could save the company "in the low hundreds of millions of dollars per year."

It's likely that NRG Energy, like other power companies interested in new nuclear plants, "are groping for balance of some kind," said David Freyman, vice president at the energy consulting firm Barnes & Click in Dallas. They want to spread their investments in coal, natural gas, renewable sources and, now, nuclear.

And NRG Energy and others want to gauge public response to new nukes.

"Congress has loosened the licensing rules a bit, and some are putting their toes in the water," Freyman said. "They know it'll be a long process, no matter what happens, but I'm not sure anybody has the guts to go through a full-blown licensing process."

Although the accidents at Three Mile Island and Chernobyl have faded for many, "there's so much emotion tied up in the whole thing. They need everybody on their side, and that means starting with a low-level PR and education effort."

The company plans to spend roughly $100 million over the next two years on permit application alone, said NRG President and CEO David Crane.

Crane heavily praised the environmental benefits of nuclear power, pointing out it doesn't create the smog-producing pollutants or global warming gases emitted by coal-fired power plants.

"We as an industry need to recognize that the 800-pound environmental gorilla in the room is carbon emissions and their impact on global warming," he said.

To illustrate his point, Crane said that the power produced by the four units at the South Texas nuclear plant would create 40 million tons of carbon emissions each year if produced by conventional coal-fired power plants.

"That amount of carbon emissions exceeds the total annual carbon emissions of Bulgaria," Crane added. "I say to each of you, if on this one site in Matagorda County, Texas, we have the opportunity to save a Bulgaria of carbon emissions each year, then we need to commit ourselves to make it happen."

Despite the potential benefits, environmental advocacy groups blistered at the proposal.

"Nuclear power has proven to be too costly and too risky," said Tom Smith of Public Citizen's Austin office. "The industry can't generate electricity without billions of dollars in subsidies."

Smith was quick to point to the contentious history of the two existing units as an indication of what could occur with the two proposed units.

When the first one finally opened in1988, it was eight years behind schedule and carried a price tag that ballooned $4.5 billion over initial projections. Five years later, after setting records for productivity and reliability, the facility sat idle for a year amid a barrage of problems with federal regulators who found fault with plant maintenance, engineering and management.

The construction delays and management problems also gave rise to lengthy litigation against original contractor Brown and Root and managing partner Houston Lighting & Power that was not resolved until the mid-1990s.

Luke Metzger of Environment Texas voiced many of the same concerns as Smith.

"This is just too dangerous," he said. "Still to this day, we don't have a good way to treat the waste."

The South Texas Project stores spent nuclear fuel on-site in concrete and stainless steel containment pools. It plans to store the waste from its new units in the same way until the federal government creates a permanent disposal facility.

A National Academy of Sciences report released least year questioned whether the industry fully understood all the safety and security concerns involved in storing a large amount of spent nuclear fuel on-site.

South Texas Project President Joe Sheppard said there is capacity to store the spent fuel on-site for the life of the plant and beyond and insisted the setup was safe and secure. He did say, however, that the permanent solution was for the federal government to create a repository, such as the controversial facility proposed for Yucca Mountain, Nev.

Staff Writers Cindy Tumiel and Vicki Vaughan contributed to this report.

TWICE THE POWER

Current plant: Two reactors opened in 1988 and 1989 produce 2,500 megawatts of electricity, enough to power more than 1 million homes.

Location: 12,220-acre site near Bay City.

Owners: CPS Energy, 40 percent; Austin Energy, the city of Austin, 16 percent; NRG Energy, 44 percent

Proposed expansion: Two reactors, which could be online by 2014 and 2015, would produce more than 2,700 megawatts. CPS Energy and Austin haven't committed to the expansion.