Avoid knee-jerk, anti-nuke moves

FORTUNE -- David Crane is CEO of NRG Energy, a Fortune 500 electricity producer based in Princeton, New Jersey. NRG has something of a split personality. On the one hand, with its heavy reliance on burning coal to generate electricity, it remains among the dirtiest power companies in the country, as measured by CO2 emissions. Yet it also aspires to a leadership role in the power industry's long march to zero-carbon emissions.

Among the projects on NRG's (NRG, Fortune 500) drawing board is a planned expansion of its nuclear facility in Bay City, Texas, that would double output and create the largest nuclear power plant in the United States. Its 18% partner in that deal: Tokyo Electric Power Company (TEPCO), operator of the crippled Fukushima Daiichi Nuclear Power Station.

Crane spoke with Fortune about the events in Japan and the future of the nuclear energy industry.

NRG has been pushing hard to expand nuclear energy in America for a long time. Until this weekend, at least, it seemed like the long-anticipated "nuclear renaissance" was finally gathering momentum.

At the public policy level, there was this moment of doubt when President Obama came in because his commitment to nuclear -- and the commitment of what's called the liberal wing of the Democratic Party -- was quite uncertain. But over the second year of the Obama administration, his rhetoric about being pro-nuclear has just gone up and up.

To the point where he mentioned his support for nuclear power in his last State of the Union Address.

Even more than mention it, he proposed the idea of a clean energy standard that would push the nation's energy mix for electricity towards zero carbon sources over the next 20 years. It would involve wind, solar and nuclear. We're just a huge fan of that idea and one of the principle beneficiaries would be new nuclear.

But now what? Have the dramatic events in Japan destroyed nuclear's prospects in the U.S., at least for the foreseeable future?

I have this empty feeling in my gut that our society is on the brink of making a knee-jerk, anti-nuke decision that will be bad for the environment and bad for national energy security. The performance of TEPCO's engineers in response to a "beyond design," once-in-a-millennium natural disaster has been nothing short of heroic.

It's been a little over a year and a half since you succeeded in fending off a hostile takeover bid by Exelon. Do you still think that was the right move? Neither company's investors have had much to cheer about since then.

Yeah, well, it's true. I'm of two minds about it. On the one hand, the idea that being part of Exelon (EXC, Fortune 500) would have been a value-enhancing proposition in the immediate and the long-term for our investors has proven wrong -- I mean, Exelon's stock was around $53 to $55 back then. If you listened to Exelon, you wouldn't have believed it had anywhere to go but up. It's been in the $38 to $43 dollar range for about the last year. I feel vindicated by that.

On the other hand, the sort of implicit contract I had with our investors is that we could do better on our own, and we haven't. The company's financial performance has been very strong. We're having our second-best year ever. But our core wholesale business of electricity generation has suffered in a low-gas-price environment. We always say we're running the company for the medium- and the long-term. The fact that it's been sort of a negative shareholder return for a year and a half is something we're not happy about, but we feel that we can turn it around.

For all your green-energy aspirations, NRG remains heavily reliant on fossil fuels, especially coal, for the electricity it generates. How has your power-generation mix changed in the last year and a half?

Our generation is so big that change is glacial. But in terms of our new investments, the seeds that we were sowing back then are starting to come to fruition, and those are all zero-carbon sources. The big change is that we've gone deep and heavy into solar power. We own four wind farms and we're happy to own them but I would say in renewable terms we're very bullish on solar and relatively bearish on wind. We continue to develop the South Texas nuclear project, which is unpopular with our shareholders. We expect there to be clarity on whether the nuclear project will go forward sometime in the next six months.

From where you sit -- with a front-row seat on the electricity market -- what signs are you seeing of an economic recovery?

It's interesting. Texas set a new winter demand record on February 9, having set the previous record the week before on February 2. We have had extremely cold weather in various parts of the United States. Weather influences demand. But what's interesting is, in other parts of the country like the Northeast, they've had extreme weather but they haven't come close to breaking any records. Our conclusion is that Texas is back to growing at 2% to 3% a year but the Northeast and California, we're not seeing it yet. The underlying economic activity is still hurting.