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October 21, 2009

This is the way the EDF deal ends

Gov. O'Malley's public admission that settlement talks with Constellation Energy Group have failed leaves him with two choices. Unable to get a scalp from Constellation in the way of rate cuts or a giveback of CEG boss Mayo Shattuck's pay, he can retaliate by having the Public Service Commission reject EDF Group's proposed investment in CEG. (Yes, I know the PSC is supposed to be independent of the governor. Yeah.)

EDF wants to buy half of CEG's nuclear-power business for $4.5 billion. Both companies have said that if the deal goes through they'll build a new nuclear unit at Calvert Cliffs, creating thousands of construction jobs and giving Maryland badly needed new, carbon-free electricity. Both companies have said that without the EDF injection they won't build at Calvert Cliffs. So O'Malley's choice No. 1 jeopardizes the nuclear unit, which he says he wants, and exposes him to voter backlash if the deal fails. (He's running for reelection next year.)

Choice No. 2 is to have the PSC approve the EDF investment without any concessions from Constellation. That's a downer for O'Malley, too. It makes him look weak. His administration has yammered about Constellation and Shattuck's pay all year, and now he backs down. That defeat obscures the substantial

concessions that O'Malley has already gotten from Constellation but apparently didn't think were sufficient to present to voters next year.

If the PSC rejects the EDF investment, Constellation would have a good case in court to go through with it anyway. The PSC, which regulates Baltimore Gas & Electric, not CEG or EDF, really doesn't have jurisdiction over the proposal. But would Constellation go through the hassle of litigation? Wall Street analysts believe it can survive without the EDF money, and it might be good for Constellation shareholders to hang onto 100 percent of the nuclear business, anyway. EDF has a new CEO and is trying to preserve cash. I believe you're looking at the next step in the failure of the EDF deal and the scrapping of the Calvert Cliffs expansion.

UPDATE: O'Malley spokesman Rick Abbruzzese points out that the PSC has the ability to approve the EDF investment with conditions. It's possible that EDF and Constellation could agree to conditions imposed by the PSC, such as BGE rate relief. But if Constellation bosses wouldn't budge on behind-the-scenes talks that O'Malley said THEY initiated, why would they make concessions through the PSC?

Posted by Jay Hancock at 8:51 AM | | Comments (19)
Categories: BGE/electricity
        

Comments

PS: With or without EDF, Constellation can direct its nuclear plant investment to constructing a plant in New York, and leave Maryland with the least amount of benefit from CEG. The Governor's short-sighted views have cost many millions going back to the failed merger with Florida Power and Light.

The companies have never said they'll build Calvert Cliffs 3 if the deal is approved. The only thing they've said is, they won't build if the deal doesn't get approved.

If I'm governor I approve the deal on condition the nuclear plant gets built in Maryland.

When it is commonly know that the earth is in danger, why...why are we considering another nuclear power plant that pollutes the air, water, & soil, that produces toxic waste we can't get rid of, contributes to global warming, uses billions of gallons of water every day which is already in short supply, pollutes the Chesapeake Bay which is already 40% dead, long term - contributes to genetic mutations to all living things, and guarantees higher utility bills when folks NOW can not afford their bill; WHY?

If anyone reads the Baltimore Sun I'm sure they're aware of Mr. Hancock's utter infatuation with CEG and a new nuclear unit at Calvert Cliffs.
Mr. Hancock is sorely mistaken about nuclear being "carbon-free" and "thousands of jobs being created." The nuclear fuel chain is responsible for significant carbon emissions - three times that of wind power , for example. A recent study by Virginia Tech Professor Benjamin Sovacool on this subject is available here :http://www.nirs.org/climate/background/sovacool_nuclear_ghg.pdf .
Out of these "thousands" of jobs that would allegedly be created , is anyone aware that only around 360 of those "thousands" of jobs would be permanent?The rest would be involved with
constuction. The long term jobs created would mostly be managerial
engineers or technical/maintenance personnel-- all of which require
years of education and would most likely not go automatically to MD
residents.Contrastingly, a figure from the Apollo Alliance states that
for every $1 million invested in energy efficiency, 21.5 jobs are
created whereas less than one job would be created for nuclear.

I'm not naive but , I have to say that I'm taken aback at the avarice , sheer avarice , that I'm seeing in people over this proposed expansion. Being from Calvert County , I'm particularly embarrassed by the current elected officials who blindly approved the proposed expansion without any hesitation whatsoever. The Calvert BOCC had the opportunity to meet with an expert on the EPR design and the French situation and they flatly refused to meet with this expert in-person , or even speak with him over the telephone. That speaks volumes to me. I've attended all of the public hearings before the PSC and all of the people who speak in support of the proposed expansion had a vested interested in Constellation , or were connected to the company in some way. I did not see or hear one , not one , "average" Marylander speak in favor of the expansion.What's that saying? Oh yeah , "It's all about the money honey." Sad.
And how many people are aware that the proposed third reactor will likely run on "bomb-grade" plutonium? Do a little research people and you will see. Even a nuclear engineer will tell you , ALL nuclear power plants emit radionuclides , that is a fact. The current two reactors at Calvert Cliffs have been dumping their thermal , chemical , and radioactive discharges into our air and Bay for over thirty years. We have EXTREMELY high cancer rates in Calvert. Every week that I open the local newspapers , I see where a child , teen , or young adult has died from leukemia , lymphoma , some form of cancer. It's alarming. Every weekend there are benefits and fundraisers for people fighting cancer.
The "buck has to stop somehwere." In this money-crazed state SOMEONE has to be guided by a moral compass.
We here in Maryland have enormous potential for wind power. Is that being utilized? No. I suppose there isn't enough money in it to interest anyone. We could have "truly" safe and "truly" clean forms of energy up and running faster than a new reactor. These forms of alternative energy would be more cost-effective and less expensive. Why are we not looking towards forms of energy that will not kill us or our environment?
The answer is , many people are greedy and have no morals.
Power corrupts.

I believe Constellation will go away from the deal. My guess is:
1.The PSC will approve with conditions
2.Constellation will move to litigation and in the meantime, will go back to EDF to pay for those new "material" conditions
3.EDF will accept (They really want this deal)
4.Constellation will back off on or around 12-17-2009!!!

Why is ignorance of science and logic tolerated? On the one hand we are supposed to admire the French for their good health but on the other hand, at least according to Regina and Julia, the French should be suffering mass death and deformation from the nuclear power plants that supply nearly 80% of the country's electricity.

If only ignorance could be suffered in isolation and not be inflicted on society as a whole.

i still don't understand why people think this deal and the new nuclear plant is a good deal for Maryland.

if the plant costs $10 billion (constellation's estimate), they'll have to recoup those costs to pay back their investors. a recent CA energy commission report projected nuclear at $0.33 cents/kwh - close to 3 times what BGE customers are paying now.

and the economic argument falls on its face too. at $10 billion, each job created by the plant will cost $2 million. You couldn't design a less effective jobs program if you tried.

I propose Constellation turn their back on this deal and on the nuclear plant and get serious about energy efficiency and clean energy instead. Instead of bickering at the PSC, the company should arm Baltimoreans with calk guns and insulation and weatherize some houses before winter sets in.

Even those who like the idea of nuclear power and believe that Chernobyl and Three Mile Island disasters will magically never happen again... Let's look at Electricite de France.

EDF is 84% owned by the government of France. Do we want any other nation (never mind France, certainly no friend to the US) to run our utility firm? As a Constellation ratepayer, I'd feel better if a US firm owned ALL of my utility corporation.

But even more important, just like Constellation,EDF is in serious financial hot water. The current Nine Mile Point plant in NY can not be decommissioned, so where will the funds come from to decomission a new reactor?

Furthermore, EDF has had many problems with radioactive contamination, particularly in Tricastin in the summer of 2008. Over 100 nuclear workers were hospitalized, and 3 rivers - including the Rhone, that flows into the Mediterranea Sea, were radioactively contaminated.

Recently, the Cadarche Plutonium work was halted as there was an excess of nearly 3 times the reported inventory of the highly radioactive material. This was categorized as a critical incident - one that put worker safety in jeopardy.

Furthermore, this past week we also learned of the dumping of radioactive materials by France in open areas of Siberia.

I don't know about you, but I don't want EDF - essentially Nuclear France - in my backyard.

Thank you very much,

Cathy Garger

Cathy,

You say you don't want France's solution for carbon free energy generation but I don't think I would be going out on a limb to believe you would like our country to adopt their medical system. I say we take both or none. What do you suggest?

And Joanna,

Having visited the French countryside I can attest to the cleanness and clearness of their atmosphere. You will not find a cleaner energy with less environmental impact than nuclear. At least one has not yet been discovered.

When we all start buying the Chevy Volt and other "plug-in" electric cars where is all that electricity going to come from? Energy efficiency will not be sufficient to provide the megawatts of power that will be required to replace gasoline propulsion with electric propulsion. The energy must come from somewhere and if gasoline is diminished something substantial must replace it.

Why not just agree with President Obama?

NEW ORLEANS, Oct 15 (Reuters) - President Barack Obama said on Thursday he is in favor of finding environmentally safe ways to tap U.S. oil and natural gas reserves and would like to see increased use of nuclear-generated electricity.

"What I think we need to do is increase our domestic energy production," Obama said at a public meeting in New Orleans. "I'm in favor of finding environmentally sound ways to tap our oil and our natural gas."

Obama also spoke about the need to rely more heavily on nuclear energy as the United States looks for ways to reduce greenhouse gases blamed for global warming.

http://in.reuters.com/article/oilRpt/idINN1531614920091015

Dan:
You will not find a cleaner energy with less environmental impact when the equipment is operating as designed than nuclear.

D'Accord.

The questions that keeps pestering at the lizard part of my brain center around private vs public financing and American engineering and petulant children in sandboxes refusing to share their toys.

Dan,

The sky may be blue and the air clear - but nuclear power kills anyway. You can not see, hear, taste, feel or smell nuclear waste. All nuclear power plants vent radioactive gases and tiny solid particles every day. These consist of 600 or more kinds of radioactive materials. Cancer and childhood leukemia cluster around these plants - proven for generations up to and including 2009- with reports freshly from Germany.

Nuclear is not carbon-free. Carbon dioxide is produced/released in the mining, milling, processing and transport of Uranium; in the construction, operation and decommissioning of nuke plants; and in the forever stewarding and securing of the "waste" material that never goes away.

Wind and solar are much closer to carbon-neutral.

Those in favor of nukes are ignorant, treasonous, and/or in the pay of false patriots who put their $$ before what is best for America.

Jay, this discussion has expanded from "EDF or not" into the "Nuke or not"; which is a fair argument.

Like Dr. Skorodin above I'm also philosophically opposed to Nuclear Power; not as vehemently as he but still just as opposed as I was 40 years ago when a school science class (hello Mr. Wright) trip to a BGE plant tour ended up in a 90 minute pro nuke indoctrination presentation.

As building any plant will require ten years before the first watt of power gets metered (at whatever rate) I'm left wanting some current objective data on the age, condition, efficiency, etc of the conventional fuel power plants in the region.and the cost/benefit viability of continuing to rely on them looking forward 10 or 20 or 30 years that may be required before we have *something* new to rely on.

Care to sic one of your interns on the project of assembling that data?


Morton,

I would not be the first to remind you that the sun does not shine at night and the wind does not blow when its calm.

And do not windmills and solar panels require high-energy manufacturing? Or, I suppose they are just delivered to earth by the tooth fairy. And of course once they are installed they never require maintenance or replacement.

The sun is also a lethal killer from both the UV rays and the heat it emits. In fact more people are killed by sun rays than have ever been killed by a non-Soviet nuclear facility.

We all die, Morton and lest there is a news blackout from across the pond the French seem to be living just as long and longer as us Americans. Apparently all that nuclear leakage is not doing them as much harm as you think.

Mr. R: What interns!?? What staff?? What secretaries? Thanks for the thoughts. I appreciate all the comments on the risks of nukes. But if nuclear power is as risky as presented, why is that not an argument for dismantling existing Calvert CLiffs and everthing else? I don't hear anyone making that plea. CC III is a very marginal addition to the risk that is already here. Also, my guess is that in the big, long run picture, nuclear electricity is a smaller risk than climate change. Any thoughts?

Johanna:
BGE is doing just that. Check out the free home energy checkup program here: link

It should be noted that the checkup is only free if you allow BGE to install a few energy efficient fixes to address issues they identify. If you let them walk away, you pay $40 but who in their right mind would do that? This is a no-brainer.

Bob UU,

thanks - I know BGE is getting energy efficiency programs up and running. In fact, My organization, Maryland PIRG, helped pass the state law that requires utilities to implement energy efficiency programs as a way to reduce electricity use in the state.

the truth is that if MD meets the EmPOWER Maryland energy efficiency goal, we'll save 1.7 times more power than woudl be generated by Calvert Cliffs... and all those savings would come by 2015 - fast enough to address our state's reliability problems, and three years before the best-case estimate for CC III to come online.

And while I commend BGE for leading the rest of the utilities in the state on getting the programs up and running, they themselves are far behind when it comes to actually getting on track to meet the statewide energy efficiency goal.

instead of spending company resources on nuclear power, constellation should double up its efforts on energy efficiency and get into the wind and solar business.

President Obama visited the Desoto sola plant in Florida today. it's the largest and newest in the nation. Anyone wants to look at the numbers? (source: FPL, the plant's owner)
Power:25 MW (installed)
Energy: 42,000 MWh/year (FPL estimate)
The two numbers above tell us that the capacity factor is estimated to just short than 20%. This means the plant is expected to deliver electricity only 20% of the time on an averaged year. Think lights on Monday all day and a few hours on Tuesday, then off for the rest of the week...
Cost: $150M
Footprint: 180 acres

Now look at this:
2005 MD consumption of electricity: 68,000,000 MWh (Source DoE)

You would need to cover the equivalent ~290,000 acres of land with solar panels (~7 times the Washington DC area) to meet the 2005 MD consumption. And spend $242B, B as in billions; simple math on the numbers above. Or you could build 5 nuclear plants (CCNPP-3 would generate 13,000,000 MWh/year, lowballing a capacity factor of 95% on the 1600 MW capacity). For ~50 billions. With a total footprint of ~100 acres. You do the math now.

PS: is it really so good for the Earth to cover its surface with panels that suck away the sunlight intended for the soil? or to make electricity by stopping the winds that are meant to spread seeds, support birds, dry and shape its land?

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Wednesdays and Fridays.
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