New Maryland Nuclear Reactor Depends On Loan Guarantee -Constellation
March 29 2010 - 1:20PM
Dow Jones News
Constellation Energy Group (CEG) needs a government loan
guarantee and higher natural-gas prices before the company will
proceed with plans to build a new reactor at the Calvert Cliffs
nuclear power plant in Maryland, Constellation Chief Executive Mayo
Shattuck said Monday.
Plans for a third reactor at Calvert Cliffs are "highly
dependent on the loan guarantee program" and on tax credits for the
production of new nuclear power, according to Shattuck, who was
speaking at the company's analyst meeting in Baltimore.
Constellation plans to develop the reactor as part of UniStar
Nuclear Energy, a joint venture between Constellation and
Electricite de France (EDF.FR).
The proposed new reactor is a long-term bet on higher gas
prices, which set the price of the power that Calvert Cliffs 3
would generate, and on government regulations that would put a
price on carbon dioxide emissions, Shattuck said.
"Those variables will factor in," he said. "They do have to
improve from where they are today."
Nuclear power produces almost none of the greenhouse gases that
are blamed for climate change.
Shattuck didn't provide a timeline for obtaining a conditional
loan guarantee. Under the loan-guarantee program, the government
promises to assume a company's debt obligations if it defaults on
debt incurred for the projects. The loan guarantee is particularly
important for Constellation because the proposed third reactor is a
"merchant" power project, which means the company can't recover
costs by charging ratepayers at Constellations's regulated electric
utility, Baltimore Gas & Electric.
Constellation also expects financial support for the reactor
project from Coface, the French export credit agency. New nuclear
reactors in the U.S. are likely to cost $7 billion to $10 billion,
according to industry estimates.
-By Christine Buurma, Dow Jones Newswires; 212-416-2143;
christine.buurma@dowjones.com
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