The French EDF Group and Baltimore-based Constellation Energy seem to have worked out their differences over Constellation's exit from their joint venture to build a new reactor at Calvert Cliffs in southern Maryland. But the challenges to the project that caused Constellation to bail out remain.

The U.S. government is demanding stiff terms to guarantee construction loans for the reactor. EDF's construction of a similarly designed reactor in Flamanville, France is not going well -- cost overruns etc. Maryland's electricity market is deregulated. That means greater risk for EDF and U.S. taxpayers. Without guaranteed revenue ordered by the Public Service Commission, the new reactor will have to sell its electricity in the wholesale market and hope for the best.

Vast new supplies of natural gas will keep prices for megawatts from competing gas-fired generation plants uncomfortably low for nuclear developers and their backers. The failure of a climate-change bill means that non-nuclear energy won't be taxed for its carbon emissions, which would have made coal- and gas-fired plants less competitive.

And EDF apparently still needs to find a U.S. partner to take Constellation's place. Who will fill that spot? Tactically this may have been a smart move for the French. By reaching a comprehensive deal they got Constellation's agreement not to exercise a put option to sell them overvalued fossil-fuel plants. Basically they're taking over UniStar for $250 million when you include the $140 million they're paying for the venture and the $110 million in CEG stock they're paying to settle the option question.

That may be a cheaper outcome for them than if Constellation had decided to pull the option trigger. But it doesn't change the fundamentals of the Calvert Cliffs project.