Maryland regulator approves Calvert Cliffs 3

30 June 2009

Constellation Energy has received final approval from the Maryland Public Service Commission (PSC) for a proposed new reactor at its existing Calvert Cliffs nuclear power plant.


Calvert Cliffs (NRC)
Calvert Cliffs (Image: NRC)
The PSC has issued a Certificate of Public Convenience and Necessity (CPCN) after completing a comprehensive, 18-month review that included several public hearings. The application for the proposed unit was submitted in November 2007 by Unistar Nuclear Energy (UNE), the strategic joint venture between Constellation and Electricité de France (EdF). The CPCN is required before any construction work can begin. It addresses a range of potential environmental and reliability impacts of the proposed new reactor, including air, water, wetlands, cultural and historic impacts.


"This decision serves as another significant milestone in Unistar's efforts to build certainty for our proposed Calvert Cliffs Unit 3," said George Vanderheyden, president and CEO of Unistar. He added, "This is a crucial step in the state regulatory process and demonstrates Maryland's commitment to providing clean, safe, reliable and carbon-free electricity to the region."


Michael Wallace, vice chairman and CEO of Constellation and chairman of UNE, commented: "Today's PSC approval is critical to Maryland's energy future and we applaud the commission for recognizing the vital environmental, economic and energy benefits of a third nuclear energy facility at Calvert Cliffs and the significant benefits it will create for businesses and residents across the state of Maryland."


In December 2008, EdF reached a "definitive investment agreement" with Constellation to acquire half of its nuclear generation and operation business for $4.5 billion. Under the terms of the agreement, EdF will also provide for an immediate $1 billion cash investment in Constellation. The deal will also include an option for Constellation to sell up to $2 billion worth of non-nuclear generation assets to EdF. EdF has also provided Constellation with a $600 million interim finance facility, which will remain available until receipt of all regulatory approvals relating to the transfer of the non-nuclear generation assets or for six months, whichever is earlier.


Earlier this month, the Maryland PSC announced its decision requiring a pre-approval process for Constellation's pending nuclear joint venture with EdF. The PSC had concluded that EdF's less than 50% investment in Constellation's nuclear subsidiary would result in EdF acquiring the power to exercise substantial influence over its utility, Baltimore Gas and Electric (BGE).


Wallace noted, "It's important to also recognize that completing the proposed EdF nuclear joint venture is essential to Constellation Energy being able to work through the next set of challenges to develop this clean energy opportunity for Maryland. It is unrealistic to think that we will be able to raise the capital required for a project of this magnitude if the perception persists that Maryland's business, regulatory and political environment is hostile to such transactions." He added, "Simply put, Constellation Energy's potential investment in a new nuclear facility at Calvert Cliffs 3 and the successful close of the Constellation-EdF joint nuclear venture are inseparable."


The proposed new unit, a 1600 MWe Areva EPR reactor, would be constructed next to Constellation's existing Calvert Cliffs nuclear power plant in Lusby, Maryland. The site currently houses two 865 MWe pressurized water reactors (PWRs). Unistar's application for a combined construction and operating licence (COL) is currently under review by the US Nuclear Regulatory Commission (NRC).


In May, Unistar announced that the Calvert Cliffs project was one of four selected by the US Department of Energy (DoE) to enter the final phase of due diligence for a share the of $18.5 billion of federal loan guarantees being made available for advanced nuclear projects.


"Receipt of a conditional loan guarantee commitment by the end of 2009 would position Unistar to make a final decision to proceed with the project," the company said in a statement.