Calvert County solicits reactor

Seeking expansion at power plant, it offers tax break to Constellation

August 09, 2006|By JAMIE SMITH HOPKINS AND PAUL ADAMS | JAMIE SMITH HOPKINS AND PAUL ADAMS,SUN REPORTERS

Trying to jump ahead of perceived competition, Calvert County approved yesterday a tax break worth an estimated $300 million to Constellation Energy Group as an inducement to expand its nuclear power complex in Southern Maryland.

Baltimore-based Constellation, the largest wholesale provider of electricity in the country, wants to build at least five reactors nationwide with a partner and hopes to put the first at its Calvert Cliffs plant. The company formally requested the tax break in a recent letter, county officials said.

Constellation's intentions are no guarantee that the reactors will be built, because nuclear power is a highly charged issue and because new reactors are subject to the approval of the federal government. But spiraling energy prices have helped bring nuclear generation back into vogue. Energy regulations passed last year encourage companies to expand the number of reactors.

Calvert, a fast-growing and increasing affluent county, wants to ride the turning tide to a big job expansion. State officials, meanwhile, see the proposal as a needed investment in local power supply. Though no new nuclear plants have been licensed for nearly 30 years, in part because of safety concerns, county and state leaders describe the potential expansion in positive terms.

"The state needs an additional power source," said Aris Melissaratos, Maryland's secretary of business and economic development, whose department expects to offer incentives once talks are more advanced.

With about 800 workers, Constellation's Calvert Cliffs twin-reactor plant is one of the largest employers in Calvert County and is far and away the largest taxpayer, local officials said. A third reactor would create an additional 400 jobs, county leaders say.

The county granted the company's request for a 50 percent break on property taxes over 15 years for the proposed third reactor. That would save Constellation about $20 million a year, said Danita Boonchaisri, marketing and communications specialist with the Calvert County Department of Economic Development. The company now pays $15.5 million in annual property taxes, she said.

"I personally think it's a great deal for the citizens of Calvert if we can pull that reactor to Calvert County," said David Hale, president of the Board of County Commissioners, which approved the incentives. The county and the company have been in talks for about a year, he said.

Constellation said the tax credits are a critical step forward for Calvert Cliffs, which began operating in 1975, and are in line with incentives other communities have offered to encourage new reactors.

"One of the early steps you take is to work with all your critical stakeholders - especially in a local area - to ensure that they are favorable to building a nuclear reactor in their area," said George Vanderheyden, a senior vice president at Constellation who heads the company's nuclear joint venture. "I believe you only want to build these where they're wanted."

Constellation Energy is one of about a dozen energy companies and consortiums that have told federal regulators of their intention to file applications to build nuclear reactors, though none have committed themselves to doing so. In all, about 18 new reactors have been proposed. No new nuclear power plants have been licensed in the United States since 1978, the year before a partial meltdown at the Three Mile Island nuclear plant near Harrisburg, Pa.

In September, Constellation teamed with nuclear reactor builder Areva SA of France to form UniStar Nuclear, a joint venture that will design and develop a line of reactors and market it to energy companies nationwide.

Constellation has said that it hopes to complete its first application by late 2007 or early 2008, which would set in motion a review by the federal Nuclear Regulatory Commission that could take three years or more. Construction would take at least four years.

Constellation's Nine Mile Point Nuclear Station in Scriba, N.Y., also is being considered as the site of a new reactor. Both sites could be selected. A Constellation spokesman said community officials in Scriba have not offered incentives similar to Calvert County's but that talks are under way.

Incentives are a common and often criticized part of efforts nationwide by local and state governments to persuade businesses to move in, expand or stick around.

"The critical question comes down to: Is this particular tax incentive really going to be the driving factor for Constellation Energy making its business decision?" said Stephen Elmore, director of the Maryland Budget and Tax Policy Institute, a nonprofit that focuses on the impact of state policy on low- and moderate-income people.

"The citizens of Calvert County would undoubtedly want to ask themselves, `Do we think this seems like a good deal?' ... It's very difficult to quantify the benefits and to show that they will in fact make up for that revenue loss."

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