Project demise hurts Maryland, environment
Shame about the demise of Constellation Energy's and EDF Group's plan to build a third nuclear reactor at Calvert Cliffs. There are many reasons behind it, but a huge one is the failure of Congress to pass climate-change legislation. If carbon emissions were taxed or otherwise penalized, carbon-free nuclear energy would be quite competitive economically. The plant would have created thousands of jobs as well as badly needed megawatts for Maryland and displaced some of the filthy and carbon-emitting coal electricity plants we rely on now.
And make no mistake, the project is dead. In its press release, Constellation said: "UniStar [the joint venture with EDF] has not withdrawn its application for a federal loan guarantee and no decisions have been made regarding the future of Calvert Cliffs 3." But this effectively ends it.
The way this came about is somewhat surprising. The fact that the project collapsed is not. Constellation pulled out unilaterally from the deal, snubbing its French partner EDF by not consulting it. I suppose this means Constellation's negotiations with EDF over a put option to sell EDF several of Constellation's fossil-fuel electric plants are not going well. Constellation holds an option to sell the plants to EDF for up to $2 billion -- perhaps $1 billion more than they're worth. Naturally EDF is trying to persuade Constellation not to pull the trigger.
The companies have not divorced yet, however. EDF still holds large investments not only in Constellation's existing nuclear fleet but also in Constellation common stock -- levers that it can use in negotiations over the put option. The prospect looms for EDF to dump its nearly 10 percent stake in Constellation stock. Still, I bet Constellation shares rise on Monday as investors express relief that the company isn't taking on the large risks of building a nuclear plant.
I thought the Calvert Cliffs project would die after the Energy Department denied loan guarantees. But DOE never made a hard decision, apparently insisting on conditions unacceptable to Constellation instead. At this late date it amounts to the same thing. DOE probably balked at the fact that this was a spec deal on Constellation and EDF's part. That is to say, in deregulated Maryland there was no way the cost could be passed onto customers in a guaranteed way by the Public Service Commission. The project would have to sell its megawatts
in the open market and hope to recover its costs. Nuclear projects have come to grief in the past. Without a guaranteed revenue stream, even the government pulled up short of guaranteeing the construction loans.
If the deal seemed dodgy to DOE, it wasn't looking so great lately for Constellation, either. As mentioned, the absence of climate-change legislation hurt the economics. But so does new and surprising access to deep pockets of natural gas across the Appalachians. The price of natural gas has plunged, making it a more attractive fuel for electricity generators compared with uranium.
So we're getting setbacks on several game boards. A project that would have juiced the economy is dead. Maryland again his no long-term plan for electricity to support growth in coming decades. (The end of the Calvert Cliffs project makes it even more crucial to approve the PATH and TRAIL transmission lines from the west.) And as the planet cooks, the nation takes another step back from addressing climate change.
Comments
Best thing that could have happened to Maryland!
Calvert Cliffs-3 was a boondoogle from the beginning--if completed it would have provided electricity too expensive for anyone to buy. And its radioactive waste would have continued piling up on the shores of the Chesapeake Bay, just like the existing 2 reactors there.
Constellation knew the risk involved and didn't want to take any of it. Unless the taxpayers took ALL the risk, Constellation wasn't interested. The terms of the loan guarantee--essentially a 12% down payment--look pretty good to most people trying to buy a house right now. But not good enough for Constellation....
At least they got out before spending more money. Now Maryland can concentrate on developing energy sources that actually are clean, safe and sustainable.
Posted by: nirsnet | October 9, 2010 12:00 PM
So the next step is for Mayo Shattuck to upset more of the apple cart. EDF saved Mayo's job along with his buddies on the board. The socialistic French government bailed out Baltimore's oddest CEO. After lining his pockets with the destruction of AlexBrown, he resurrects Enron style games and implodes one of the country's oldest utilities. Snatched from the jaws of Buffett and common sense, EDF pays heavily to save his day. Now Mayo turns on EDF, snapping at a misinterpreted clause meant to protect the company from further Mayo-isms, the trickster now calls it his option to soak the white knights from Paris for another two billion to line his pockets. How unethical is the Baltimore business community? Is the board of Constellation totally brain dead. The opportunity to be partnered with EDF is a gold mine. Mayo has destroyed everything he touches. Perhaps the French will just save the day again and purchase the rest of Constellation, install some adult supervision and get back to the business of providing electricity. Needless to say Mayo does not play well with others.
Posted by: Pavel | October 9, 2010 1:00 PM
Dear nirsnet,
You obviuosly do not know much about nuclear power and Calvert Cliffs. I live in Southern Maryland and I am very disapointed that Constellation Energy and the Federal Government could not reach an equitable solution. CC3 could have provided thousands of jobs and created a significant tax revenue stream for MD. Calvet County has and still does enjoy clean air and a rural setting for those who wish to visit or live there.
Posted by: Nukepowerworks | October 9, 2010 1:06 PM
Oh god, please, I've never seen such nutjob responses to a Baltimore Sun story.
Radioactive waste? WE'RE ALL GONNA DIE, IT'S GONNA POLLUTE THE CHESAPEAKE! LOL
C'MON YOU IDIOTS! Do you even realize how long Calvert Cliffs has been there without a single incident or how many nuclear plants there are in France?
CAP AND TRADE! THAT'S THE REASON! WRONG AGAIN! Easy target, but misplaced blame.
The fact is Governor Martin O'Malley fought this project and its jobs and President Obama's administration does NOT SUPPORT NUCLEAR POWER and is fighting every project tooth and nail in a variety of ways because liberals DONT see nuclear power as GREEN ENERGY. Instead, they want to fund Ed Begley Jr. kiddie cars, tinker toy windmills that cost more than they produce in return, and Lego Blocks solar power, another proven failure that we're now gonna see on display doing practically nothing at The White House. Green Energy is to liberals as Show and Tell is to Grade Schoolers. It's as if they think it will work cost effectively because they saw it in a comic book ad.
MEANWHILE, FRANCE IS ENERGY INDEPENDENT COMPARED TO THE U.S. THANKS TO NUCLEAR POWER!
Guess what? We're last in class again.
So much for that hope and change.
And by the way, in case anyone here at BaltimoreSun.com didn't notice, France and most of Europe are turning more conservative while America is turning in the opposite direction.
We'll see who was right ultimately.
But Thank You Martin O'Malley for another job loss, a job well done in his opinion I'm sure.
And finally, I'm not by ANY stretch of the imagination supporting CEO Mayo Shattuck. In fact I hope the Ravens have fired his cheerleader wife by now! But, the state of Maryland has turned down 3 different merger proposals for Constellation/BGE, the first of which would have been ideal, with PEPCO. then FPL, then restrictions w/ EDF.
Maryland just knows very well how to run businesses OUT of MARYLAND because we're so bratty kid spoiled with all our government jobs.
Posted by: JoeFab | October 9, 2010 3:09 PM
Hey JoeFab! You'd rather have King Mayo getting rich off poor peoples' backs than keep Marty O in office? If it wasn't for your buddy Bobby E. sucking up to Mayo in the first place,theCEO would not have the power he has now. Thanks Bob!
Posted by: Liz H. | October 9, 2010 8:46 PM
We still need more electricity, where will we ge it. Windmills aren't up to the job. 3 or 4 big coal burners ought to do the job. Let's get crackin' on it.....
Posted by: Gary | October 9, 2010 11:51 PM
So the jobs stuff is quite frustrating. It works out that nuclear power is the least job creating way to generate energy typically 3 to 4 jobs created per million invested, as contrasted with real renewables which create around 16 jobs per million. See http://www.americanprogress.org/issues/2009/06/clean_energy_factsheets.html
Even fossil fuel facilities create more jobs. The 4000 jobs not created by Calvert Cliffs 3 will be more than replaced by any other energy source selected.
Posted by: Paxus Calta | October 10, 2010 9:45 AM
Mr. Hancock - Tell me, please, how your throwaway line about PATH and TrAIL has anything to do with the meat of your posting? Oh, that's right, you can't, because you clearly don't know anything about them! You just took it as another opportunity to beat the drum for the power companies.
I can tell you don't know anything because TrAIL was approved MORE THAN A YEAR AGO. Construction has been under way for some time now!
So it's pretty safe to assume you know even less about PATH, since it's nowhere near getting approval in any of the three states.
Y'know, since I'm sure your business card says "reporter," it would be nice if you would actually do some research and at least READ the counterarguments and contradicting information, studies, reports, testimony, etc., instead of simply swallowing the PATH companies' propaganda whole.
Posted by: Patience | October 11, 2010 11:11 AM
Wow, this is the downside to blogs. Anyone can post complete garbage without being held accountable for accuracy. Get a clue Jay! Your blog disgusts me as it's full of false info. and pro utility company crap!
Posted by: John Huber | October 11, 2010 8:24 PM