Wednesday, November 04, 2009

Constellation and EDF Form Nuclear Venture

Banner Actually, Electricite de France (EDF) and Constellation Energy have been working together for awhile, including as partners in UniStar. But this is a different venture, lately approved by the Maryland Public Service Commission and, let us say, spectacularly good news:

EDF is seeking to acquire nearly half of Constellation's nuclear assets. Constellation has said the joint venture with EDF will enable it to build a third reactor at the Calvert Cliffs Nuclear Power Plant in Lusby in southern Maryland to meet future energy demands.

The Maryland Public Service Commission included several conditions to approving the deal on Friday in the venture's last regulatory hurdle. The U.S. Nuclear Regulatory Commission approved the deal last month.

As one of the conditions, the PSC set a one-time, $110.5 million credit for customers of Baltimore Gas and Electric, a subsidiary of Constellation that is regulated by the commission. The credit will amount to about a $100 break for each BGE customer.

That’s sort of puzzling. We went over to the Maryland PSC to look at the decision – you can find it here (5 mb pdf) – and right away, on page 2, you’ll find this:

First, it is not enough for the Companies to prove that Transaction is “consistent with the public interest convenience and necessity” – they also must demonstrate that the Transaction will offer “benefits and no harm to consumers.” For the phrase “benefits to consumers” to have any meaning, the ratepayers of Baltimore Gas and Electric company (“BGE”) must receive benefits directly, in their capacity as BGE customers, not just their share of the Transaction’s impact on the public at large.

We’re not lawyers, of course, but we expect in this context the public at large and BGE customers are essentially the same. But we could easily be wrong about that. In any event, it is from this idea that the $110 million flows and it appears to be the last step in final approval. So what’s the result? Let Baltimore Sun financial blogger Jay Hancock pick up the story:

EDF will own 49 percent of Constellation's nuclear business, and they will operate it together. The PSC decision was the last regulatory hurdle that the partnership needed, U.S. federal authorities having already given it their blessing.

It also sets the stage for the construction of a third nuclear reactor at Calvert Cliffs, which both companies have pledged to pursue. The project would be one of the biggest construction projects ever in Maryland and bring new supplies of electricity to a state that hasn't seen significant generation capacity built in more than a decade.

Lots of jobs, too, we hasten to add. This is a big win and can only be considered a boon for Maryland in difficult economic times. It took awhile to get here, but here we finally are.

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