{"id":515,"date":"2012-09-06T11:11:36","date_gmt":"2012-09-06T15:11:36","guid":{"rendered":"http:\/\/www.l-a-k-e.org\/blog\/2012\/09\/nrc-rejects-nuke-permit-for-edf-in-maryland.html"},"modified":"2012-09-06T11:11:36","modified_gmt":"2012-09-06T15:11:36","slug":"nrc-rejects-nuke-permit-for-edf-in-maryland","status":"publish","type":"post","link":"http:\/\/www.l-a-k-e.org\/blog\/2012\/09\/nrc-rejects-nuke-permit-for-edf-in-maryland.html","title":{"rendered":"NRC rejects nuke permit for EDF in Maryland"},"content":{"rendered":"

\nFrench nuclear operator \u00c9lectricit\u00e9 de France (EDF)\n\n<\/a>\n\nwas denied a license last week for the proposed Calvert Cliffs<\/a>\nnuclear reactor in Maryland, because the\nAtomic Energy Act of 1954 prohibits majority foreign ownership\nof nuclear plants.\nEDF now has 60 days to find a U.S. partner, or give up the project.\nWho could the possible suitors be?\nHint: think southeast.\n<\/p>\n

\nThe handwriting was on the wall two years ago when\nConstellation Energy pulled out of the project.\nJim Polson and Alan Katz wrote for Bloomberg 10 October 2010,\n\nConstellation Drops Nuclear Plant, Denting EDF’s U.S. Plans<\/a>,\n<\/p>\n

\n

\nConstellation Energy Group Inc. pulled out of negotiations on a $7.5\n\n<\/a>\nbillion loan guarantee to build a nuclear reactor in Maryland with\nElectricite de France SA, potentially damaging the French utility’s\nU.S. expansion plans and the companies’ partnership.\n<\/p>\n

\nThe cost of the U.S. government loan guarantee that the companies’\njoint venture, UniStar Nuclear Energy, would need to build the\nCalvert Cliffs 3 reactor is too high and creates too much risk for\nConstellation, the Baltimore-based utility said in a statement\nyesterday. The statement said the next step is up to EDF. Enlarge\nimage U.S. Deputy Energy Secretary Daniel Poneman\n<\/p>\n

\nIn a letter Oct. 8 to Daniel Poneman, deputy secretary of the U.S.\nDepartment of Energy, Constellation said it received a government\nestimate that the venture would have to pay about $880 million to\nthe U.S. Treasury for the loan guarantee, \u201cdramatically out of\nline with both our own independent assessments and of what the\nfigure should reasonably be.\u201d\n<\/p>\n

\nConstellation’s decision may make it more likely that the U.S.\nutility will exercise a put option forcing EDF to buy as much as $2\nbillion of Constellation’s non-nuclear power plants, said Ingo\nBecker, head of utilities sector research at Kepler Capital Markets.\n<\/p>\n

\n\u201cEDF very clearly said if they exercise the put, this thing is\nover,\u201d Becker said. \u201cConstellation may have just turned\naround the calendar and pulled out of the new build before\nexercising the put, anticipating EDF’s reaction.\u201d\n<\/p>\n

\nIn a letter Oct. 8 to Daniel Poneman, deputy secretary of the U.S.\nDepartment of Energy, Constellation said it received a government\nestimate that the venture would have to pay about $880 million to\nthe U.S. Treasury for the loan guarantee, \u201cdramatically out of\nline with both our own independent assessments and of what the\nfigure should reasonably be.\u201d\n<\/p>\n<\/blockquote>\n

\nMeanwhile, Southern Company\n\nis still trying to reduce what it has to pay for its\n$8.3 billion federal loan guarantee<\/a>.\n<\/p>\n

\nBack in Maryland, the news got worse for the nuke last year.\nEDF\n\nasked for the state’s help<\/a>,\nbut didn’t get the answer it wanted.\nScott Dance wrote for Baltimore Business Journal 16 December 2011,\n\nEDF: Constellation-Exelon settlement hurts Maryland nuclear industry<\/a>,\n<\/p>\n\n\n

\n

\n\n<\/a>\nConstellation Energy Group Inc. nuclear partner EDF Group argues a\nsettlement over its proposed merger with Exelon Corp. puts the\nstate’s nuclear industry at risk \u2014 and could potentially kill\nplans for a new nuclear reactor, according to a report.\n<\/p>\n

\nThe French utility challenged Gov. Martin O’Malley for throwing his\n\n<\/a>\nsupport behind the merger after announcing a settlement with Exelon\non Thursday. EDF took issue with the lack of any commitments in the\nsettlement regarding nuclear power generation in the state. The\nsettlement meanwhile included requirements that Exelon build up to\n300 megawatts of natural gas and renewable power generation in\nMaryland.\n<\/p>\n

\n\u201cAt this time of economic uncertainty, EDF is surprised that\nGovernor O’Malley is supporting a transaction that still poses\nsignificant risks to Maryland jobs and to the state’s nuclear\nindustry,\u201d EDF officials said in a statement. The deal\n\u201cthreatens hundreds of high-value, high-quality Constellation\nEnergy Nuclear Group jobs,\u201d the statement said.\n<\/p>\n

\nEDF has argued the deal is a bad one because it would reduce the\nautonomy of CENG, a joint venture between EDF and Constellation that\nowns five nuclear reactors. Constellation (NYSE: CEG) and\nChicago-based Exelon (NYSE: EXC) have proposed merging in a $7.9\nbillion all-stock deal.\n<\/p>\n<\/blockquote>\n

\nA governor favoring renewable energy over nuclear?\nTsk tsk.\n<\/p>\n

\nSo who could EDF partner with for the Calvert Cliffs nuke?\nNot Constellation.\nNot Exelon.\nMaybe NextEra Energy, parent company of Florida Power and Light (FPL).\nMaybe Dominion Resources of Virginia, or American Electric Power (AEP),\nor FirstEnergy, or PPL, or any of a number of others.\nBut Constellation wanted out because the project was too costly\nand too long-term.\nAccording to\n\nthe Forbes Global 2000<\/a>, all those companies are smaller than Exelon.\n<\/p>\n

\nWhat U.S. electric utility companies are larger than Exelon?\nThere are only two.\nSouthern Company (SO), formerly the largest electric utility in the U.S.\nand sixth largest in the world.\nBut the new size champion is Duke Energy of North Carolina,\nafter its merger with Progress Energy of Florida.\nBoth Duke and SO have their own nuclear projects, so I would guess\nit’s unlikely they’ll take on yet another one.\nEspecially when that Calvert Cliffs project is in Maryland, which does\nnot have the kind of utility monopoly regime that SO and Duke enjoy.\n<\/p>\n

\nThis failed EDF nuke project makes it clearer why SO was the first company\nto get a nuclear permit in 30 years:\nit was the only one big enough and monopolistic enough to pull it off,\nand even then it’s such a\n\nbet-the-farm risk<\/a>\nthat even SO only dared it with the regulatory capture triple-whammy\nof\n\na stealth tax in the form of a rate hike on Georgia Power customers for\npower they won’t get for years if ever,<\/a>\na captive Public Service Commission\n\nrubber-stamping costs<\/a> (and soon cost overruns<\/a>),\nand an \n$8.33 billion federal loan guarantee.<\/a>\n<\/p>\n

\nAnd what if even one of that three-legged regulatory capture stools legs\nwent away?\n\n<\/a>\nIf we elect new Public Service Commissioners and legislators this year,\none or both of the Georgia legs could get revoked.\nAnd if we lobby Congress and the federal government, maybe that\nfederal loan guarantee, which apparently has never been finalized,\nmight never get finalized.\nThen we could stop\n\npouring money down that rathole on the Savannah River<\/a>\nand get on with\n\n<\/a>\n\nsolar<\/a>\nand\nwind<\/a> power.\n<\/p>\n

\nPS: Owed to Allison Fisher.\n<\/p>\n

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