EDF offer unlikely to revive Calvert Cliffs project
Not much time. On the way to the PSC's hearings on the electricity grid's notorious reliability pricing model, which basically pays generation plants for merely existing and hasn't done its promised job of luring new generation projects to Maryland.
The EDF Group offer to take over development of Calvert Cliffs 3 is a long long shot. A million things have to go right. If EDF were to take over UniStar, it and Constellation Energy Group would have to come to terms. They would have to agree on a price for CEG's 50 percent UniStar stake. It would be contentious . Same goes for EDF's alternative offer to take over 100 percent of the development costs but keep CEG as UniStar partner. If that happened EDF would almost certainly want more equity in the Calvert Cliffs project, or if it didn't it would be crazy. That again would be subject to tough negotiation.
If EDF takes over all of UniStar, it would eventually need a new U.S. partner for the whole venture or at least for Calvert Cliffs. Who would do it? Not to mention all the other challenges to the project already mentioned: DOE's reluctance to extend loan guarantees, problems with EDF's reactor project of the CC3 model in France, newly cheap natural gas, which makes new nuclear plants less likely to be profitable, etc.
Comments
The confusion and contradiction obscures the real issue. What is Mayo trying to do?....Line his pockets with other people's money. Mayo has no desire to be an industrial champion of electric generation, infrastructure development, or anything to do with real engineering or construction, he is a player. What is the real goal? Get EDF out of his sandbox so he can play. Merge, sell? Acquire....doubtful, that is hard work, running a real company, managing assets, making money....playing games is Mayo's style....but not EDF's style. How many issues has EDF uncovered already on the running of the nuclear business, cost allocations, accounting, cash flow, earnings...needless to say a few French eyebrows have been raised. Mayo does not like adults in his sandbox. Besides, great distraction to be had to distract from the deteriorating earnings picture. Screwing his French partner is the only big cash at hand for Mayo this year. Look beyond the headlines to understand what is really going on in Mayo's head.
Posted by: Pavel | October 14, 2010 9:19 AM
Jay,
I agree with your view... EDF proposal to take over Unistar is unlawful...Remember the 49.99% of the Atomic Energy Act?
What would happen to the CCOL of CC3?
Posted by: CC | October 14, 2010 3:19 PM
Jay,
I agree with your view... EDF proposal to take over Unistar is unlawful...Remember the 49.99% of the Atomic Energy Act?
What would happen to the CCOL of CC3?
Posted by: CC | October 14, 2010 3:20 PM
Atomic Energy Acts explicitly prohibits foreign "ownership, control or domination" of a U.S. nuclear reactor.
Thus, taking out a bigger stake in CC3 is not an option for EDF. Indeed, we (Nuclear Information and Resource Service) are already in litigation before the NRC licensing board where we charge that the existing structure of UniStar and the involvement of the French govt (through EDF, Areva and French export-import bank) already violates the Act. We expect to win on that if it is ever heard (i.e., if UniStar does not withdraw its application) before a likely early 2012 hearing date.
Posted by: Michael Mariotte | October 14, 2010 4:28 PM
Jay,
You should try to get a look at the Thursday airing of Jim Cramer's "Mad Money" show. Cramer singles out Constellation as a terribly run company and puts Mayo on his "Wall of Shame" as CEO who should either resign or be fired. He really trashed the stock. It will be interesting to see what the stock does Friday.
Posted by: JE | October 15, 2010 7:33 AM