NO.

2009 CI 19492

THE CITY OF SAN ANTONIO, IN THE DISTRICT COURT

TEXAS, ACTING BY AND
THROUGH THE CITY PUBLIC
§
SERVICE BOARD OF SAN
ANTONIO, A TEXAS MUNICIPAL
UTILITY
Plaintiff, §
§
V. § 37TH JUDICIAL DISTRICT
§
TOSHIBA CORPORATION; NRG
ENERGY, INC.; NUCLEAR
INNOVATION NORTH AMERICA, §
LLC, NINA TEXAS 3 LLC, AND
NINA TEXAS 4 LLC,
Defendant. § OF BEXAR COUNTY, TEXAS

PETITIONER’S PLEA IN INTERVENTION

TO THE HONORABLE JUDGE OF SAID COURT:

NOW COMES Ratepayer Protection Coalition, hereinafter

called Petitioner, intervening in the above-styled suit and for

cause of action shows unto the Court the following:

DISCOVERY CONTROL PLAN LEVEL

1. Plaintiff intends that discovery be conducted under

Discovery Level 3.

PARTIES AND SERVICE

2. Petitioner, Ratepayer Protection Coalition, is a

nonprofit entity organized in Texas whose address is 202 East

Park Avenue, San Antonio, Texas 78212.

3. Plaintiff, CPS Energy has its principal office in

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Bexar County, Texas and may be served at 145 Navarro, San

Antonio, Texas 78205.

4. Defendant NINA Texas 3 LLC (“NINA 3”) is a Delaware

limited liability company registered to do business in Texas,

with its principal place of business in Texas, doing business in

Texas and can be served by serving CT Corporation System, 350

North St. Paul Street, Dallas, Texas 75201.

5. Defendant NINA Texas 4 LLC (“NINA 4”) is also a

Delaware limited liability company registered to do business in

Texas, with its principal place of business in Texas, doing

business in Texas and can be served by serving CT Corporation

System, 350 North St. Paul Street, Dallas, Texas 75201.

6. Defendant Toshiba Corporation ("Toshiba") is a

Japanese corporation conducting substantial business in the

State of Texas and may be served through the Texas Secretary of

State pursuant to §17.044 of the Texas Civil Practice and

Remedies Code because Toshiba does not maintain a regular place

of business in the State of Texas and this action arose from

Toshiba's business activities in the State of Texas.

7. Defendant NRG Energy, Inc. ("NRG") is a Delaware

corporation conducting substantial business in the State of

Texas and may be served through the Texas Secretary of State

pursuant to §17.044 of the Texas Civil Practice and Remedies

2
Code because NRG does not maintain a regular place of business

in the State of Texas and this action arose from NRG's business

activities in the State of Texas.

8. Defendant Nuclear Innovation North America, LLC. Is a

Delaware limited liability company conducting substantial

business in the State of Texas and may be served through the

Texas Secretary of State pursuant to §17.044 of the Texas Civil

Practice and Remedies Code because NINA does not maintain a

regular place of business in the State of Texas and this action

arose from NINA's business activities in the State of Texas.

JURISDICTION AND VENUE

9. The Court has already established subject matter

jurisdiction in this matter.

10. This Court has already established jurisdiction over

the parties in this matter. Ratepayers Protection Coalition is

a nonprofit entity organized in Texas and all members are Texas

residents.

11. Venue in Bexar County is proper in this cause.

STANDING

12. Ratepayer Protection Coalition is a nonprofit

organization whose mission is to use educational and legal means

to protect ratepayers residing in and outside of San Antonio

from high utility bills, financial waste, fraud,

3
misrepresentation and illegal expenditures; to protect San

Antonio taxpayers from high utility bills, financial waste,

fraud, misrepresentation and illegal expenditures; and to

protect San Antonio voters by ensuring that the process for

developing a San Antonio comprehensive energy plan is free from

the taint of fraud and misrepresentation.

13. The Ratepayers Protection Coalition has

associational standing on behalf its members because (1) its

members have standing to sue in their own right; (2) the

interests it seeks to protect are germane to the organization’s

purpose; and (3) neither the claim asserted nor the relief

requested requires the participation of individual members in

the lawsuit. Texas Ass’n of Bus. V. Texas Air Control Bd., 852

S.W.2d 440, 447.

14. The individual members have standing to sue in their

own right because (1) the members have suffered an “injury in

fact,” an invasion of a legally protected interest that is

concrete and particularized, and that is actual and/or imminent,

(2) the injury is traceable to the challenged action of the

defendant and not the independent action of a third party not

before the court, and (3) it is likely that the injury will be

redressed by a favorable decision. Lujan v. Defenders of

Wildlife, 504 U.S. 555, 560-61 (1992), See Brown v. Todd, 53

4
S.W.3d 297, 305 (Tex. 2001).

15. The taxpayer members have standing because they are

taxpayers and public funds are to be expended and have been

expended on illegal activity. Hendee v. Dewhurst, 228 S.W.3d

354, 373-74 (Tex-App.-Austin 2007, pet. denied.) Even if the

matter were capable of being resolved between the two existing

parties, the case would not be moot and Ratepayers Protection

Coalition’s remedies must be ordered since the underlying

dispute is one that is “capable of repetition, yet evading

review.” Iranian Muslim Org .v. City of San Antonio, 615 S.W.2d

202, 209 (citing Nebraska Press Ass’n v. Stuart, 427 U.S. 539,

546 (1976).

FACTS

16. Petitioner seeks to intervene in this suit to protect

the interests of the City of San Antonio, CPS Energy ratepayers,

City of San Antonio taxpayers, and City of San Antonio voters.

17. While CPS Energy is a party to this suit as Plaintiff,

the history that led to the filing of this suit demonstrates

that CPS Energy comes to this Court with unclean hands and

cannot adequately represent the interests Petitioner seeks to

represent.

18. Specifically, CPS Energy conducted a campaign of

misinformation, disinformation, and deception designed to

5
convince the San Antonio community about the merits of pursuing

nuclear power and disparage the merits of alternative strategies

for meeting future energy needs.

19. The CPS Energy strategy also involved misleading and

deceiving the City Council in an attempt to convince the City

Council to pursue nuclear expansion by claiming that a decision

not to pursue the nuclear project would lead to the loss of

hundreds of millions of dollars spent on the project to date by

CPS Energy.

20. This suit itself demonstrates the facile manipulation

of evidence and facts that characterizes CPS Energy’s behavior

for at least the past two years.

21. This suit styles the plaintiff as “The City of San

Antonio,Texas acting by and through the City Public Service

Board

of San Antonio, A Texas Municipal Utility.” Complaint at 1.

22. The City Council of San Antonio, however, never

authorized the filing of this suit.1 As will be demonstrated

below, the interests of the City of San Antonio Mayor and City

Council conflict with those of the CPS Energy Board (CPSB).2 Had

1 Based on information and belief, the City Public Service (CPS

Energy) Board of Directors did not meet to discuss and authorize
the filing of this suit. Instead, the CPS Energy staff
contacted individual Board members by telephone to secure
authorization.
2 Because the term “Plaintiff” would encompass both the City
of San Antonio and CPS Energy, Petitioner will specify either
the City of San Antonio or CPS Energy throughout this petition
6
the City Council been consulted about the filing of this suit,

that conflict might have emerged prior to the filing of this

litigation.

23. As will also be set forth below, this conflict of

interest raises issues regarding the adequacy of representation

for the City of San Antonio’s interests in this case. Had the

City Council discussed this litigation prior to filing,

representation appropriate in the situation might have been

retained. The CPS Energy rush to file foreclosed the

opportunity for such discussion.

24. Petitioner argues that Petitioner’s interests coincide

with those of the City of San Antonio, CPS Energy and its

ratepayers, City of San Antonio taxpayers, and voters, i.e.

complete disclosure of all relevant information regarding the

selling of the nuclear project to the community and the true

nature of CPS Energy’s actions in this regard. Only such

disclosure can put the public discussion of energy policy back

on track, ensure sound financial decisions restore credibility

to the process, and provide the opportunity for energy decisions

truly in the best interest of the community.

Absent independent representation for the City of San Antonio

itself, Petitioner stands in for those interests.

and avoid the use of the term “Plaintiff.”

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 25. Substantively, this suit alone demonstrates the
absence

of clean hands on the part of CPS Energy.

26. On October 29, 2009, the City Council had scheduled a

vote on $400 million in bonding authority for CPS Energy with

the proceeds of those bonds to be used for nuclear power

expansion. If approved, this bond vote would have been the City

Council’s first authorization of expenditures for nuclear

expansion.

27. Without such authorization, CPS Energy had already

spent approximately $300 million on the nuclear project from the

CPS Energy reserve funds.

28. Prior to City Council vote, CPS Energy told the City

Council that if the Council did not vote to continue

participating in the expansion, CPS Energy would lose the

investment to date.

29. The representation by CPS Energy that a no vote on

nuclear by the Council would cost CPS Energy $300 million

weighed heavily on the Council. Members discussed whether the

losing of $300 million now would be better than the risk of

losing far more later. The potential for lost investment had a

major influence on the upcoming vote, as CPS Energy knew that it

would.

30. When hidden information about $4 billion in cost

8
increases surfaced and the vote was cancelled, CPS Energy filed

suit. In the suit, after noting its $300 million investment to

date, CPS Energy argued that the existing contracts in the

nuclear partnership were either ambiguous or silent with respect

to ownership rights in the Project if one co-tenant exercises

its contractual right to withdraw from the Project. Complaint,

Section 8.

31. The “ownership rights” referred to are the rights

conferred based on the investment prior to withdrawal. The

initial question presented to this Court by CPS Energy was

whether CPS Energy had a vested interest in the project based on

investment to date or loses that investment, if CPS Energy

“unilaterally withdraw[s].” Ibid, Section 10. CPS Energy

requested this Court to determine “the risks, benefits, and

consequences of a unilateral withdrawal.” Ibid., Section 25.

32. Subsequently, when disappearing City Council support

for nuclear expansion made withdrawal appear even more likely

and blame for the collapse of public and official support for

San Antonio’s participation appeared likely to fall on CPS

Energy, CPS Energy took exactly the opposite position and argued

that the existing agreements are unambiguous as to ownership

rights being vested. San Antonio Express News, Saturday,

January 9, 2010 at 1.

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Explaining the reversed position, CPS Energy’s Acting General
Manager said:

“Generally our position has been that the documents are unclear

as to what the party does if they choose to withdraw and that is

what we’re asking the judge to clarify.¨

Ibid at 13 (emphasis added).

33. The characterization of this suit as seeking guidance

on the procedure for withdrawing is false and misleading. This

suit is an action to determine “risks, benefits, and

consequences” not procedures.

34. Thus, when seeking to coerce the City Council into

funding the nuclear project, CPS Energy presented the loss of

the $300 million as inevitable, unless the Council approved

participation.

35. When the CPS Energy strategy collapsed and default

threatened, CPS Energy rushed to this Court to get a ruling on

whether such a loss would occur, admitting that the existing

contracts did not specify what would happen to such investments.

36. When that claimed ambiguity produced a counterclaim by

NINA that the investment would be lost, CPS Energy changed its

position yet again in order to answer that argument with a claim

that the agreements are explicit and unambiguous and entitled

CPS to a vested interest. That argument repudiates the

representations made to the City Council about inevitability of

10
loss and the “silent and ambiguous” foundation for the initial

Complaint filed in this action.

37. Clearly CPS Energy finds the truth to take whatever

shape is called for by the CPS Energy strategy of the moment.

This example is typical of the behavior of this utility

throughout the nuclear debate and a basis for Petitioner’s

argument that CPS Energy lacks clean hands.

38. As noted above, the proposed $400 million in bonding

authority would have been the first time the City Council

specifically authorized participation or investment in on the

nuclear expansion. CPS Energy made large investments in the

nuclear expansion without ever seeking or receiving permission

from the City of San Antonio.

39. On one occasion, CPS Energy did come to the San

Antonio City Council to request a 5% rate increase that included

some funds to invest in the nuclear project.

40. As a result of public pressure, the City Council cut

the rate increase to 3.5% and prohibited use of the funds for

nuclear expansion.

41. Thus, the only time CPS Energy sought any agreement

from the City Council to participate in the nuclear project, the

City Council rejected that approach. That rejection further

motivated CPS Energy to put the Council in a position where

11
rejection was politically impossible.

42. CPS Energy repeatedly misrepresented the nature of the

nuclear expenditures being made in order to conceal its strategy

of locking San Antonio into the project prior to seeking formal

Council approval of participation.

43. At different times, the expenditures were

characterized as studies, preliminary site design and

engineering, preliminary design and engineering of the reactors,

and as a down payment on the reactor vessel construction.

44. The consistent aspect of the explanations offered was

that the expenditures were characterized as being made solely

for the purpose of determining the ultimate cost and whether to

proceed with the project.

45. The actual purpose of creating political pressure to

participate in the project did not appear until the $400 million

bond vote came up. Then CPS Energy showed its true purpose by

claiming the contracts required either continuing or facing

default, as discussed above. CPS Energy’s nuclear investments

from internal funds constituted one element of a broader

conspiracy to foreclose the City of San Antonio from deciding

not to pursue the nuclear option. NRG Energy took actions that

appear to be similarly designed to mislead City of San Antonio

public and elected officials.

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 46. In pursuit of this conspiracy, CPS Energy and its

partner NRG Energy made presentations to the general public and

the City Council regarding the nuclear project that were

deceptive.

47. On June 19, 2007, NRG Energy claimed the project would

cost $5.2 billion. That figure was a ludicrous underestimate, as

demonstrated by the current estimate in excess of $18 billion.

NRG and CPS Energy must have known at the time that the initial

estimate was well below the real expected cost. In March 2008,

citizen groups provided CPS Energy, City Council and the public

a professionally researched study that found costs could reach

$17.5 billion.3

48. The CPS Energy pattern of providing unrealistically

low estimates for the nuclear expansion continued up until the

last moment.

49. At one point, NRG Energy issued an estimate of $10

billion and CPS Energy issued an estimate of $13 billion at

about the same time. In an interview on August 11, 2009, a

reporter asked about the discrepancy.

50. Steve Winn, chief executive officer of Nuclear

Innovation North America, NRG's nuclear development arm in

partnership with Toshiba, responded:

3 “Nuclear Plant Capital Costs for the Two Proposed NRG Reactors at the South
Texas Project,” Arjun Makhijani, Ph.D., March 24, 2008.
13
 "We're in a different position" from CPS, Winn said. "CPS
wants to be accurate with you."...
"We want Toshiba scared and to give us the lowest possible
cost. For us, it's all about the contract," Winn said.
If Toshiba is late, "they're going to lose a lot more money
than we are," he said. A fixed-price contract would
make Toshiba - and not CPS nor NRG - responsible for
cost overruns.
San Antonio Express-News, August 12, 2009 at 1C.

51. Thus, CPS Energy’s partner admitted to stating a

knowingly false low estimate for the nuclear expansion as a

contract negotiating technique. Such an estimate contributed to

the conspiracy to deceive the San Antonio community into entering

the project

52. This demonstrated lack of character had no influence on

CPS Energy’s continuing to partner with NRG.

53. Also of note, NRG Energy’s estimate in this instance

was substantially lower than CPS Energy’s estimate, belying the

claims being made in this case now by CPS Energy that Defendants

inflated the costs to drive CPS Energy out of the project.

54. In June 2009, CPS Energy received estimates from

Toshiba that increased the projected cost far beyond the $13

billion figure.

55. Nevertheless, CPS launched a public campaign at that

point to convince San Antonio ratepayers and voters that the

nuclear project had the best economic benefits of any energy

option available. The campaign specifically used the $13

14
billion figure, not the updated figures that would have produced

an estimate closer to $17 billion.

56. In pursuit of the conspiracy, CPS Energy conducted a

series of public meetings promoting the nuclear option with the

use of knowingly false cost figures in pursuit of a

ratepayer/voter commitment to the proposed nuclear project.

57. In further pursuit of the conspiracy, CPS Energy

participated in public forums sponsored by the Mayor and Council

and presented false and misleading information in pursuit of a

ratepayer/voter and City Council commitment to the nuclear

expansion.

58. Internally, CPS Energy knew what it was doing. Mike

Kotara, a key spokesperson for CPS Energy at public meetings,

used the $13 billion figure repeatedly before the public and the

City Council in the campaign for nuclear beginning in June 2009.

Yet at the same time, Mr. Kotara wrote an email in which he

stated he was:

very disappointed that we have come this far, and

only now are learning of how wide the gap is between our
estimate and Toshiba’s. It is hard to understand
how we can spend in excess of $200 million, and
still have $1-2 billion gap between us and our
contractor. . . . Our project costs and rate projections
are clearly understated.

59. CPS Energy conspired to and did deliberately

understate the costs of nuclear and overestimate or otherwise

15
disparage the alternatives to prevent an honest and objective

public discussion on energy policy. By presenting false

information, CPS Energy violated the rights of the public to

participate in democratic decision-making. By denying the

public truthful information, CPS Energy violated the public’s

First Amendment rights; free speech means nothing if the

information being discussed is false. As the primary source of

information relied upon by the public and the City Council, CPS

Energy’s pursuit of deception poisoned the public discourse.

60. In pursuit of the conspiracy to trap San Antonio into

the nuclear project, CPS Energy manipulated figures on the

likely costs of energy efficiency and renewable energy options

to portray these alternatives as costing far more than CPS

Energy knew to be the case and, thereby, to falsely portray

nuclear as more cost effective.

61. As just one example, CPS Energy claimed that the STEP

program providing $850 million for energy efficiency and

renewables over 12 years could only save 771 megawatts. That

claim is that the cost to save energy is $1,102 per kilowatt

hour.

62. Yet over the last 20 years Austin saved 700 megawatts

through energy efficiency at a cost of $350 per kilowatt hour

and projects future energy efficiency savings to cost $500 per

16
kilowatt hour. CPS Energy inflated the cost of saving energy to

justify the need for added baseload capacity, i.e. nuclear.

63. The first report on the STEP program’s implementation

revealed that an expenditure of $11.5 million saved 40

megawatts, a cost of $288 per kilowatt hour saved. The release

of these figures further called into question the $1,102 per

kilowatt hour CPS Energy figure.

64. While CPS Energy is required to file a public

quarterly report on the implementation of the STEP program, CPS

Energy now withholds the figures on how much is being spent to

achieve the energy savings documented in the report. This

withholding prevents a public analysis of how successful the

STEP program is and whether that success changes the need for

new baseload capacity. Again, CPS Energy has taken actions to

prevent a transparent and objective public participation in the

energy policy discussion.

65. In pursuit of this conspiracy, CPS Energy ignored

credible detailed studies by national experts demonstrating much

higher costs for nuclear and lower costs for alternatives.

66. CPS Energy dismissed warnings by outside experts and

bond rating houses that nuclear projects risked damaging credit

ratings.4

4 Moody’shas recently lowered the general rating of CPS Energy

from “neutral” to “negative.”
17
 67. Matters came to a head in October 2009 when the Mayor

and City Council learned just before the vote on $400 million in

bonding authority that Toshiba had provided the much higher cost

estimate referenced above.

68. The Mayor cancelled the City County funding vote and

called for an investigation of the withholding of information.

He also called for the resignations of two members of the CPS

Energy Board of Directors.5

69. CPS Energy hid a price escalation of $4 billion from

the Council knowing that the release of that information would

damage public support for the project and the chance to pass the

bonding authority.

70. Members of the City Council have been quite clear

that, based on the revelation of the hidden cost escalation,

there has been a serious breach of trust between CPS Energy and

the Council. Had the Council had an opportunity to discuss the

pursuit of this litigation, the Council might well have decided

to be represented by independent counsel.

71. In further pursuit of this conspiracy, CPS Energy

conducted a deceptive internal investigation of the withheld

information. No independent investigation by a neutral, outside

the team has occurred.

72. The investigation attempted to portray the withheld

5 One director is resigning. The second is refusing to resign.

18
information as non-material and the withholding of the

information as reasonable. The investigation attempted to blame

the Mayor or portray the Mayor as an unwitting dupe of NRG

Energy’s attempt to manipulate CPS Energy out of the project.

The investigation attempted to falsely portray the Mayor’s Chief

of Staff as deliberately withholding information from the

investigation.

73. The deliberate withholding of the cost escalation

information from the Mayor and City Council and the subsequent

attempt by the CPS Energy internal investigation to excuse CPS

Energy staff and besmirch the Mayor and his staff are part of

the evidence Petitioner offers for the proposition that there

are conflicting interests between CPS Energy and the City of San

Antonio that foreclose CPS representing the interests of the

City.

75. At the same time, the investigation revealed that NRG

Energy had encouraged CPS Energy to reveal the “current status

of the estimate,” i.e. the cost escalation, because NRG Energy

had a meeting scheduled in November at which the increase would

be discussed and media coverage would take place. Had the

council vote occurred, the announcement of a $4 billion cost

escalation a month later would obviously have created a major

political fire storm.

19
 76. CPS Energy responded that CPS Energy did not plan to

release the cost escalation information because further cost

information was coming in January. CPS Energy characterized the

proposed release of the escalation number in November as “a

major problem.” The decision by CPS Energy to withhold the

escalation information led to the October political upheaval

when NRG leaked the escalation information to the Mayor and

media.

77. CPS Energy filed suit without permission of the San

Antonio City Council. Presumably, CPS Energy can also settle

this suit without the participation of the San Antonio City

Council. If so, the voters of San Antonio and their elected

representatives have no part in the process.6

78. CPS Energy may well be motivated to settle by a desire

to prevent any further disclosures of the fraud committed by CPS

Energy against the City Council, the ratepayers, the taxpayers,

and the voters. Such a motivation could lead to a settlement

adverse to the interests of the fraud victims. Absent the

presence of Petitioners, the interests of the fraud victims will

not be represented.

79. For the above and foregoing reasons, Petitioners

intervene in this case.

6 The Mayor does serve as a voting member of the City Public Service Board.

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 RATEPAYER PROTECTION COALITION'S CLAIM FOR FRAUD

80. The actions of CPS Energy and NRG Energy towards the

City of San Antonio City Council, ratepayers, taxpayers, and

voters meet the legal test for fraud.

81. Common law fraud has nine elements:

a. a representation of an existing fact;

b. its materiality;

c. its falsity;

d. the speaker's knowledge of its falsity;

e. the speaker's intent that it shall be acted upon by the

plaintiff;

f. plaintiff's ignorance of its falsity;

g. plaintiff's reliance on the truth of the representation;

h. plaintiff's right to rely upon it; and

i. consequent damages suffered by plaintiff.

82. All the above elements appear in this case.

a. In June 2009, CPS Energy represented the cost of the

nuclear project to be $13 billion.

b. The cost has been the single largest consideration in

and very material to the decision to be made by

the City Council on participating in the nuclear

project.

c. The $13 billion figure was false based on the new

21
 estimate provided by Toshiba.7

d. CPS internal investigation confirms that personnel the

South Texas Operating Group and the nuclear group

within CPS upper management knew of the

Toshiba escalation and that the $13 billion was

false. Mike Kotara's expressions of concern noted

above demonstrate that knowledge and also reinforce the

materiality of the escalated estimate. If Kotara

treated the estimate as a real problem, then the

estimate was material.

e. CPS Energy clearly intended the City Council to make

its decision based on the $13 billion estimate

and certainly understood that an escalation to $18

billion would be a deal breaker, given all the

discussion about the permissible levels of rate

increase/bill increase acceptable to the Council. The Mayor

characterized the higher estimate as outside the range of

possibility.

f. The City Council did not know the $13 billion estimate

was false and knew nothing of the escalated estimate.8

7 Even though Toshiba said that the estimate was outdated, the
direction of an updated estimate was almost certainly going to
be upward and certainly not downward by billions, so that
characterization by Toshiba does not make the new estimate non-
material and does make the assertion of $13 billion without any
caveats false and misleading.
8 The CPS investigative report seeks to portray an informal
22
 g. The Mayor had gathered almost all the Council members to

support the $400 million in bonds and make a commitment to

the project based on the $13 billion estimate and reliance

on the truth of the $13 billion estimate.

h. CPS Energy is the primary source of information for the

City Council on energy matters, so City Council

appropriately relied upon the CPS estimate as a basis for

decision-making.

i. The financial damages suffered by the City Council,

ratepayers, tax payers, and voters are found in the

following:

1. CPS Energy spent more than $300 million in

ratepayer funds without any protection for

ratepayers should the City Council decide not to

participate in the nuclear project. The

potential for losing all those funds is

demonstrated by the perceived need on the part of

CPS Energy to file this suit. That CPS Energy spent

more than $300 million without ever having a final

contract that defined what would happen if CPS

conversation between then Acting General Manager Steve Bartley

and the Mayor as demonstrating that the Mayor knew of increased
cost estimates. In that brief conversation, the Mayor asked
Bartley how much higher the cost might go and Bartley said
perhaps up by a billion. Whatever the characterization of that
conversation, the public and the City Council clearly did not
know of the cost increase.
23
 Energy withdrew from the project is evidence of three

things: (1) CPS Energy’s ideological commitment to

pursue nuclear power even to the potential

detriment of ratepayers;(2) CPS Energy's blind confidence

in its ability to control the City Council's vote

on nuclear; and (3) incompetence.

2. CPS Energy expended thousands of dollars of

Ratepayer funds on the sham public forums held last

year.

3. The City Council expended taxpayer funds to hold

meetings and forums to discuss energy without

knowing that the discussion was based on false

information.

4. The City Council spent innumerable hours

deliberating about nuclear without knowing the

information being debated was false.

5. The false discussion process now requires a new honest

process to determine future energy policy be conducted at

great expense to rate payers and taxpayers.

j. The harm from fraud is usually determined by financial

damages. The essence of fraud, however, is deception and the

damage done by deception. In this case, the damage goes well

beyond financial damage.

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 1. The City Council vote on the $400 constituted a major

political risk for the Council members. Opposition to the

nuclear commitment is deep and widespread, as demonstrated by

the hundreds of people who turned out at the public meetings to

express such opposition.

2. But for the decision of NRG Energy to leak the

escalation information, the City Council would have approved the

$400 million in bonds and then seen their political careers

implode when the cost escalation was announced a month later.

3. Now the nuclear project is a toxic subject for the

City Council. There can no longer be a rational discussion of

nuclear participation because there is no credibility left on

that issue at CPS Energy.

4. There is a general gulf of distrust between the City

Council and CPS Energy. The deception poisoned the political

dialogue on the crucial issue for San Antonio's energy future.

5. The exposure of the fraud also led to key management

personnel at the utility resigning and at least one member of

the Board resigning. There is a vacuum of leadership at both

the Board and staff level of CPS Energy at a time when important

decisions on energy need to be made. This vacuum is a

foreseeable result of the fraud because revelation of the fraud

would be expected to produce such a result.

25
 6. The community essentially has to start all over to

have an objective, credible energy discussion.

84. NRG Energy played its part in the fraud with

unrealistically low estimates of the nuclear costs laying the

groundwork for CPS Energy to portray the $13 billion as a

reasonable figure. While not necessarily embracing the entire

theory of CPS Energy’s conspiracy allegations against NRG Energy

in this case, Petitioner believes that there are elements of

that conspiracy which may prove to be acts in furtherance of the

conspiracy alleged in this petition.

85. The Court can take note of the fact that on October 29,

2009, the San Antonio City Council had scheduled a vote to give

CPS Energy authority to issue $400 million in bonds. Had the

Council approved the issuance of those bonds and those bonds

been sold prior to the revelation of the fraud discussed herein,

the sale of the bonds would have constituted a criminal act. See

Sarbanes Oxley Act, 15 U.S.C. Sec. 801 et.seq. Only the leak of

the hidden information about the cost escalation prevented the

commission of this criminal act.

RATEPAYER PROTECTION COALITION’S CONSTITUTIONAL CLAIMS

86. Petitioners also allege constitutional injuries resulting

from the actions of the parties in this case. San Antonio

voters are entitled to local self-government. Tex. Const. art

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I, § 2.

87. Self-government relies upon the democratic process of

debate, which in turn relies upon the accuracy of the

information being debated. CPS Energy and NRG Energy provided

false and misleading information to the San Antonio community

and thereby denied the San Antonio voters their right of self-

government.

88. Similarly the voters of San Antonio are entitled to the

preservation of the republican form of government. Texas Const.

art I, § 2.

89. The republican form of government relies upon elected

representatives to make decisions in the best interest of the

voters who elect them. CPS Energy and NRG Energy provided false

and misleading information to the San Antonio City Council and

thereby denied the voters of San Antonio their right to a

republican form of government.

90. Petitioners suffered an injury in fact to their

constitutionally protected interests that are particularized and

concrete. Those injuries trace directly to the actions of the

parties to this litigation. This court can take appropriate

action to prevent further such injuries.

REMEDIES

91. Plaintiff, Ratepayer Protection Coalition, proposes the

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following remedies:

1. Generally, the Petitioner seeks to ensure that all the

relevant facts come out; that the interest of the City Council,
ratepayers, taxpayers and voters are protected; that any further
fraud and misrepresentation are prevented; that the energy
planning process going forward is transparent, credible, and
objective.
2. Specifically, Petitioner seeks (1) discovery sufficient to
determine the full scope of the fraud and misrepresentation
committed against the City of San Antonio, its voters, its
taxpayers and CPS Energy ratepayers; (2) an order that all such
evidence be made publicly available; (3)an injunction preventing
settlement discussions that exclude Petitioner until such time
as discovery is completed; (4) an order that any funds collected
or recovered by CPS Energy in this litigation be used to fund an
independent energy planning process that is conducted by a
broad-based citizen's committee appointed by the San Antonio
City Council and supported by its own staff and consultants, to
fund the energy alternatives identified by the independent
energy planning process, and to fund implementation of the
Mission Verde program.
3. CPS Energy and NRG Energy agree to terminate their agreement
to develop the nuclear expansion in such a way that CPS Energy
is out of the project
4. Ratepayers interest in land and water rights are protected.
5. The only authority that the City of San Antonio has in this
matter is the appointment of new board members, approval of bond
authority and approval of rate increases. The City of San
Antonio has no authority over the CPS Board itself or over the
employees of CPS Energy.
6. Petitioners therefore request that the Court appoint a
Special Master to oversee the actions and decisions of CPS
Energy and report back to the Court. This Special Master should
have authority to attend all meetings of the Board including
executive sessions and have access to any member of the staff at
any time.

DAMAGES FOR PLAINTIFF, RATEPAYER PROTECTION COALITION

As a direct and proximate result of the occurrence made

the basis of this lawsuit, Plaintiff, Ratepayer Protection
Coalition, was caused to suffer financial loss and to incur
damages.

i. The financial damages suffered by the City Council,

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 ratepayers, tax payers, and voters are found in the following:

1. CPS Energy spent more than $300 million in ratepayer funds

without any protection for ratepayers should the City Council

decide not to participate in the nuclear project. The potential

for losing all those funds is demonstrated by the perceived need

on the part of CPS Energy to file this suit. That CPS Energy

spent more than $300 million without ever having a final

contract that defined what would happen if CPS Energy withdrew

from the project is evidence of two things: (1) CPS Energy’s

ideological commitment to pursue nuclear power even to the

potential detriment of ratepayers;(2) CPS Energy's blind

confidence in its ability to control the City Council's vote on

nuclear; and (3) incompetence.

2. CPS Energy expended thousands of dollars of ratepayer

funds on the sham public forums held last year.

3. The City Council expended taxpayer funds to hold meetings and

forums to discuss energy without knowing that the discussion was

based on false information.

4. The City Council spent innumerable hours deliberating

about nuclear without knowing the information being debated

was false.

5. The false discussion process now requires a new honest

process to determine future energy policy be conducted

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 at great expense to rate payers and taxpayers.

6. The City of San Antonio and CPS Energy have expended

Ratepayer funds to urge San Antonio voters to contact City

Council is support of the nuclear project based on the

false cost data distribution to the public.

j. The harm from fraud is usually determined by financial damages.

The essence of fraud, however, is deception and the damage done

by deception. In this case, the damage goes well beyond

financial damage.

1. The City Council vote on the $400 constituted a major

political risk for the Council members. Opposition to

the nuclear commitment is deep and widespread, as

demonstrated by the hundreds of people who turned out

at the public meetings to express such opposition.

2. But for the decision of NRG Energy to leak the

escalation information, the City Council would have

approved the $400 million in bonds and then seen their

political careers implode when the cost escalation was

announced a month later.

3. Now the nuclear project is a toxic subject for the City

Council. There can no longer be a rational discussion

of nuclear participation because there is no

credibility left on that issue at CPS Energy.

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4. There is a general gulf of distrust between the City

Council and CPS Energy. The deception poisoned the

political dialogue on the crucial issue for San Antonio's

energy future.

5. The exposure of the fraud also led to key management

personnel at the utility resigning and at least one

member of the Board resigning. There is a vacuum of

leadership at both the Board and staff level of CPS

Energy at a time when important decisions on energy need

to be made. This vacuum is a foreseeable result of the

fraud because revelation of the fraud would be expected to

produce such a result.

6. The community essentially has to start all over to have

an objective, credible energy discussion.

7. The CPS Solartricity Producers Program designed to

encourage the use of solar energy initially set the

release of guidelines for applications in mid- November

2009. In part because upper management was too busy with the

scandal to address questions arising about the program, the

guidelines have not been released and are not expected to

be released until the Spring of 2010. There are proposals

pending in response to CPS Energy requests for

proposals for alternative energy that are similarly on hold

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awaiting upper management decisions. There are projects

independent of the requests for proposals being

proposed to CPS Energy for renewable energy that are not

being addressed.

8. All of the time and resources being spent to respond to

the scandal are time and resources taken away from

other endeavors by CPS Energy and the City Council.

9. The disclosure of the fraud took place despite the

efforts of CPS Energy to keep the fraud secret. Had the

bonds been approved and sold prior to the disclosure of

the fraud and the fraud subsequently been discovered,

CPS Energy would almost certainly have expended ratepayer

funds to defend against criminal charges and seen its bond

rating jeopardized resulting in higher costs of borrowing.

10. CPS Energy and NRG Energy agree in this case that the

controversy created by the filing of this case is

damaging the likelihood that the South Texas Project

Units 3 and 4 will be selected for federal government loan

guarantees and that loss of those guarantees could

jeopardize the continuation of the project and all

investment to date. (See also Express-News, January 10,

2010 at 8B). The fraud alleged by Petitioners is the

immediate cause of this litigation and, therefore, created

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the threat to the continued viability of the project.

PRAYER

91. WHEREFORE, PREMISES CONSIDERED, Plaintiff, Ratepayer

Protection Coalition, respectfully prays that the Plaintiff, CPS

Energy, and Defendants be cited to appear and answer herein, and

that upon a final hearing of the cause, judgment be entered for

the Petitioner, Ratepayer Protection Coalition, against

Defendant for damages in an amount within the jurisdictional

limits of the Court; together with pre-judgment interest at the

maximum rate allowed by law; post-judgment interest at the legal

rate, costs of court; attorney fees, appointment of a Master to

oversee CPS Energy and such other and further relief to which

the Plaintiff may be entitled at law or in equity.

Respectfully submitted,

Karen Dalglish Seal

State Bar Number 24009207
202 East Park Ave.
San Antonio, Texas 78212
Tel. (210) 226-8101
Fax (210) 226-8175
Attorney for Petitioner
Ratepayer Protection Coalition

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PLAINTIFF HEREBY DEMANDS TRIAL BY JURY

Certificate of Service

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