Constellation, officials working to keep CC3 project going
Wednesday, Oct. 20, 2010
By Meghan Russell,
Southern Maryland Newspapers Online
The nuclear ball is now in EDF’s court.
A letter from Constellation Energy to its UniStar Nuclear Energy partner went public on Friday as the company announced its proposal to sell its 50 percent investment of its nuclear venture in the hopes that Calvert Cliffs Nuclear Power Plant’s third reactor can move forward.
In the letter to Constellation’s partner, Electricite de France (EDF) SA, company vice Chairman Michael J. Wallace proposed transferring its 50 percent interest in UniStar, including the land where the third reactor is set to be built, for just $1. The company requested reimbursement of $117 million in generic development costs for the U.S. Evolutionary Power Reactor (EPR), just a fraction of the two companies’ joint investment of $817 million in the Calvert Cliffs 3 venture.
In addition, Constellation pledged its full support and cooperation in seeing through the transfer’s terms and assisting EDF however it can in bringing the reactor to Calvert.
"Having invested considerable time and resources into our partnership, we agree with you that there is significant market value in UniStar," Wallace’s letter states. "Our proposal provides a solution by which our companies can quickly resolve UniStar’s ownership structure, so that EDF can preserve and maximize UniStar’s value and advance the prospects of CC3 with confidence."
In the terms listed at the letter’s end, Wallace said that Constellation will continue to provide administrative services for a period of up to one year after the deal’s closing, when new terms will be discussed.
Furthermore, the option to sell $2 billion of fossil fuel energy to EDF — an issue that has raised concerns over their partnership’s future — is a separate issue altogether, Wallace continued, and Constellation will address it as such: "That commercial dispute should not be used to hold the prospect of CC3 hostage."
But even if EDF agreed to take the project under its wing, many skeptics, like the Nuclear Information and Resource Service, doubt the conditions are right for a "nuclear renaissance" and believe Calvert Cliffs 3 was doomed from the start.
"Calvert Cliffs’ demise was a result of several factors, the most important of which were: soaring construction cost estimates; increased and aggressive competition from other generation sources; falling electrical demand coupled with increased energy efficiency programs; serious reactor design deficiencies; and overreliance on government handouts," NIRS Executive Director Michael Marriotte said in a press release Thursday. "The Office of Management and Budget and the Department of Energy are responsible for none of these factors. In fact, their loan offer for Calvert Cliffs 3 was overly generous considering the overwhelming array of market forces and roadblocks facing this project."
Marriotte said the "simple reality" is that a nuclear renaissance in the U.S. will be impossible if new reactors remain too expensive to build and natural gas remains "dirt cheap" while renewable energy costs continue to decline and consumer demand remains on a downward spiral. The same forces acting against Calvert Cliffs will most likely cause the remaining nuclear reactor loan guarantees to fall through for the South Texas Project and Virgil C. Summer Nuclear Station reactor project in South Carolina as well.
Peter Bradford, a commissioner with the Nuclear Regulatory Commission and the former chairman of the New York State Public Service Commission, added, "The four pillars of the nuclear revival — underestimated costs, ignored risks, political ballyhoo and prodigious but inadequate subsidies — now make clear that we are dealing not with a renaissance but with a bubble. The main remaining question is just how much taxpayer money will go into keeping it inflated."
Constellation addressed the unfavorable conditions in its letter to EDF but also acknowledged a herd of Calvert Cliffs 3 supporters, hoping they might continue to fight for the project.
"We have had the firm support of the Maryland Congressional delegation, the Governor, our allies in labor and the public officials and the people of Calvert County," Wallace wrote. "House Majority Leader Steny Hoyer (D-Md., 5th), in particular, has been a stalwart supporter of the project and has done and will continue to do all he can to improve conditions for the renaissance of new nuclear. And for this we are very grateful."
Hoyer said he is also optimistic about the third reactor. He, along with Gov. Martin O’Malley and Sens. Barbara A. Mikulski (D-Md.) and Benjamin L. Cardin (D-Md.), sent a letter to Mayo A. Shattuck III, president and CEO of Constellation, and Henri Proglio, chairman and CEO of EDF, on Friday.
The letter urged the two companies to engage in active negations immediately regarding Calvert Cliffs 3.
"The [third reactor] is extremely important to the State of Maryland, and especially the Fifth District, for its promise to create jobs and invest in the next generation of nuclear energy," Hoyer said in a press release.
Cardin, who also sees merit in the new nuclear future, said, "The quality jobs and economic opportunities for communities in Maryland are undeniable, but the benefits that next-generation nuclear facilities like this will bring to our nation are even greater. Nuclear energy is an essential component of a new, clean-energy economy and an energy-independent United States. Projects like [Calvert Cliffs 3] will strengthen our national security, economic security and our environment."
Former Republican governor and gubernatorial candidate Robert L. Ehrlich, Jr. has touted the project during campaign stops in Southern Maryland and has used its deterioration as further fuel in his run against O’Malley.
Ehrlich met last Thursday with several local business owners, mostly from the Lusby and Solomons area, who had been anticipating the arrival of 4,000 new workers and made plans to either expand or hire new employees. Now, along with Unit 3, those plans are on hold.
"Just last week, Martin O’Malley had the ear of the President of the United States – an extraordinary opportunity to make a personal appeal in support of this project," Ehrlich said in a statement released last Friday. "Instead, he put his reelection campaign ahead of the interests of everyday Marylanders who would benefit from the thousands of new jobs associated with this project."
Del. Anthony J. O’Donnell (R-Calvert, St. Mary’s), congressional candidate Charles Lollar and Calvert County Commissioner Jerry Clark (R) joined Ehrlich at the roundtable discussion in Solomons.
"We’re in desperate need of new revenues," O’Donnell said Monday night following a candidate forum in Leonardtown. "The business community is afraid they’ll need to pick up the slack through their taxes."
O’Donnell placed the blame of the project’s downfall on O’Malley, saying the governor’s attempts to extract rate relief from Constellation while the Maryland Public Service Commission reviewed the company’s merger with EDF delayed the project eight months. "We shouldn’t be here," O’Donnell said. "My assessment is this patient is on life support, but there’s a faint pulse."
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