Constellation Energy to join a plant venture

French reactor-builder, Baltimore company aim to boost nuclear power

September 16, 2005|By Paul Adams | Paul Adams,SUN STAFF

Constellation Energy Group announced yesterday a joint venture with a French nuclear reactor builder to design, develop and market new nuclear plants, launching a new phase in the Baltimore-based power provider's efforts to lead a resurgence in nuclear power in the United States.

The new venture between Constellation and Areva SA, to be called UniStar Nuclear, will seek to form joint ventures with other power providers and investors interested in building or having partial ownership in a new line of reactors based on Areva's European Pressurized Reactor design. The design is the basis for a new plant under construction in Finland and one under development in France.

Areva is in competition with General Electric Co. and British Nuclear Fuels PLC to develop the first new reactors in the United States since the Three Mile Island accident in Pennsylvania in 1979 chilled interest in nuclear power. No nuclear power plant has been licensed in the United States since 1978.

Those companies are working with NuStart Energy LLC, a consortium of utilities including Constellation that is seeking to obtain a license to build reactors in the United States. Constellation said it remains committed to NuStart and will continue to finance its operations.

However, Constellation is withdrawing its Calvert Cliffs Nuclear Power Plant in Lusby and its Nine Mile Point Nuclear Station in Scriba, N.Y., as potential sites for a NuStart reactor. The two sites were among six under consideration by NuStart. Instead, Constellation will reserve both sites for a potential reactor developed under UniStar.

Constellation, which owns three nuclear power plants, would operate the UniStar plants and likely take partial ownership, giving it more power to sell on the wholesale market. Constellation's shares rose 52 cents in trading yesterday to close at $60.78.

Constellation is the nation's largest seller of power in markets where big energy users are allowed to buy electricity from competing utilities.

The U.S. version of Areva's design would be built by Bechtel Group Inc., a global construction and engineering firm that has worked on more than 150 nuclear plants worldwide.

"Nobody has ever done anything quite like this before," said Michael J. Wallace, executive vice president of Constellation Energy and co-chief executive of UniStar Nuclear. "It's a bold move recognizing that a fleet of standardized power plants is what will work best in the marketplace."

For now, Constellation is marketing a business model, which it hopes will attract other utilities in need of new generating capacity. At least a dozen utilities in the United States have expressed interest in new nuclear reactors in response to rising demand for power and the soaring cost of natural gas and coal.

But many utilities have balked at undertaking the extravagant time and expense of getting a new plant licensed. UniStar would offer one-stop shopping for such utilities by taking care of the extensive licensing requirements and completing the design and arranging construction. UniStar will be reaching out to interested utilities with the hope of securing joint venture agreements by the end of next year.

For its part, Areva, the world's largest builder of nuclear reactors, has dedicated more than 200 engineers and at least $200 million over the next few years to getting a U.S. version of its European plant licensed in the United States. The plant's design must be adapted because European and U.S. power grids operate on different frequencies. The U.S. version would generate 1,600 megawatts, enough to power about 1.3 million homes.

"For the first time in at least a generation, we will be making large nuclear components for new nuclear plants in the U.S.," said Thomas A. Christopher, Areva's chief executive.

Areva said it expects to be in position to take orders for new reactors in the United States by 2008, with construction beginning by 2010 and operations starting by 2015.

Areva's new generation of reactors include a variety of safety features not found in older U.S. nuclear plants. Among them is a water-filled basin that would capture and cool the nuclear core in the event of a meltdown. The plant under construction in Finland is expected to take four years to build.

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