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April 29, 2011

Exec: Exelon deal won't revive Calvert Cliffs project

Exelon's announced purchase of Constellation Energy prompted speculation that the dormant project to build a third reactor at Calvert Cliffs on Maryland's Chesapeake shore would be revived. Exelon is the country's biggest operator of nuclear power plants. Calvert Cliffs 3 is shovel ready if only somebody would finance it. The French EDF Group, which owns 100 percent of the project at the moment, may have approached Exelon as a potential partner.

But one of the first things Exelon boss John Rowe did on yesterday's conference call was to say: No way.

"That is simply not the case," Rowe said. "At today's gas prices you can't build a new nuclear plant in a competitive marketplace."

Seemingly permanently lower natural gas prices make electricity from gas-powered plants much cheaper than electricity would be from a new, un-depreciated nuclear power plant. Older nuclear plants are quite profitable because the mortgages are paid off. But a new one would cost many billions with big financing costs. The French would like the state of Maryland or somebody else to guarantee the purchase of electricity from Calvert Cliffs 3, but that's not going to happen.

And it's not going to get built on spec, either.

UPDATE: Bill Vanko and I talk on WBAL about how Constellation is trying to sell the merger to customers, employees, politicians and regulators.

Posted by Jay Hancock at 9:16 AM | | Comments (4)


This is the difference between the private sector considers an investment in a project and when the public sector does.

Private sector: is it profitable?

Public sector: will this make me look good? Will this benefit my buddies? What kind of support can I gain from this? Will the bill come due after my time? Etc. etc. etc...

Guess this all depends on if we are a communist state or a capitalist state. In a communist state the project would be built and the tax payers would pay for it. In a capitalist state someone in wallstreet decides if it's profitable or not, and if not, it's not being built.

Also, I think the quote above must be incorrect. I think it's missing the word 'Natural'.

"At today's [natural] gas prices you can't build a new nuclear plant in a competitive marketplace."

Great column re: Exelon. I sent an e mail to talkback re: this very bad business deal for consumers and stockholders alike. I don't think the Sun will print it. Hope you can see it.

Calvert Cliffs 3 is shovel ready? Hardly. The plant did not have approval from the NRC to be built. Much less approved plans for the sight. Just more wishful thinking by pro-nuclear dreamers. Just like nuclear is too cheap to meter and meltdowns dont happen.

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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 Tuesdays and Sundays.

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