Two state projects could benefit

Energy bill might boost growth of nuclear plant, liquid natural gas terminal

July 29, 2005|By Tom Pelton | Tom Pelton,SUN STAFF

The energy bill moving toward approval in Congress this week could provide financial boosts to two giant proposals to expand nuclear power and the importation of liquid natural gas in Maryland, industry advocates said.

Hundreds of millions of dollars in subsidies, tax breaks and deregulation provisions could help Constellation Energy of Baltimore build a third nuclear reactor at Calvert Cliffs, and help Dominion power of Richmond nearly double its capacity to process imported gas at Cove Point in Calvert County, officials said.

During a visit to the nuclear plant on June 22, President Bush trumpeted the incentives as ways to help get the nuclear power industry back on its feet after more than two decades of torpor that followed the Three Mile Island accident in 1979.

."It is critical to any company considering a new nuclear plant that the federal government step forward with the proper incentives associated with the first few plants to be built in the last 25 years," said Michael Wallace, president of Constellation Generation Group.

One provision would clarify the federal government's power to approve the location of new gas importation terminals, overriding any objections from state or local governments.

During the debate over the bill, Democratic Sen. Barbara A. Mikulski of Maryland supported a failed amendment that would have given governors the authority to veto the construction of new liquid natural gas terminals in their states.

"Local communities worry about the placement of liquefied natural gas facilities because of their potential dangers to the environment and public safety," Mikulski said.

Brad Heavner, director of the Maryland Public Information Research Group, said the energy bill should have included more money to encourage fuel efficiency, solar power and alternative energy instead of subsidies for nuclear power.

"The first generation of nuclear power plants was built with largely private money. This generation - if any are built - is going to rely on taxpayer largesse," said Michael Mariotte, executive director of the Nuclear Information and Resource Service, an anti-nuclear group. "If this were a good technology that had a good future, Wall Street would put up the money."

The owners of the 31-year-old Calvert Cliffs nuclear power plant, which generates 20 percent of the electricity in Maryland, are part of an industry consortium called NuStart Energy Development that is considering the site as one of six possible locations to build a new reactor, if the federal government grants its approval.

A third reactor could nearly double the plant's capacity, from 1,800 megawatts to 3,300 megawatts - about 40 percent of the electricity generated in the state - at a time when demand is rising faster than supply in the region, company officials said. But the project would also cost $2.5 billion to $3 billion, said Wallace.

To help with these kinds of expenses, the bill would provide new reactors with federal tax credits worth up to $125 million a year for eight years for the first six new plants constructed, said Steven Kerekes, spokesman for the Nuclear Energy Institute, a trade group.

The bill would also provide up to $1 billion in federal "delay insurance," which would protect investors in the first two new reactors against costs growing from lawsuits or last-minute changes in government regulations, Kerekes said. Such factors caused the price of reactors in the post-Three-Mile-Island era to spiral out of control, he said.

The Dominion Cove Point liquid natural gas plant in Lusby, the busiest in the nation, warms up super-cooled methane brought to Maryland on ships from Trinidad, Egypt and other overseas locations. It reopened in 2002 after two decades of being mothballed because of low gas prices and other problems.

The terminal's owner, Dominion of Richmond, has applied to the Federal Energy Regulatory Commission to build an $850 million expansion, which would include two more gas tanks; more turbines, vaporizers, pumps and buildings; and 125 miles of additional pipeline.

The bill would help such projects by preventing state and local governments from stopping them if they receive federal approval, said Mark Stultz, spokesman for the Natural Gas Supply Association.

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