Constellation Energy Group's nuclear development arm said yesterday that it might build its first new reactor in New York instead of Maryland if the state's political and regulatory climate proves too hostile.
The company declined to elaborate on its statement. But it marked the latest sign that Constellation is ratcheting up its criticism of efforts by Maryland regulators and lawmakers to revisit the state's deregulation laws.
Gov. Martin O'Malley and the state's top utility regulator said yesterday that they were committed to the nuclear project in Maryland and would work to make sure it gets a timely review.
Constellation took issue with a recent Public Service Commission report saying a 1999 deal to deregulate the industry was lopsided in favor of the company. The report said Constellation may have violated certain terms of the agreement - a claim the company denies. And the document suggested lawmakers may want to consider forcing Constellation to provide rebates to consumers.
The company also criticized an earlier commission report that argued in favor of some form of re-regulation to help lower utility rates. That could include having utilities enter into long-term contracts for their electricity supply - a measure Constellation and others say would disrupt competitive markets.
Industry analysts immediately took note of the PSC reports, raising questions about the regulatory environment in Maryland toward the company. That perception could play into investor concerns about financing an estimated $4 billion nuclear reactor at Calvert Cliffs in Lusby.
"All things being equal, the level of uncertainty has the potential to impact investors' appetite for any large capital investment, such as a nuclear plant," said Paul Patterson, an analyst with Glenrock Associates.
The issue could prove critical to the state, which faces a potential energy shortfall as early as 2011 unless new generation or transmission lines are built. Constellation must win approval from the PSC before adding a third reactor to its Maryland nuclear plant.
In a statement released yesterday, Michael J. Wallace, a Constellation executive vice president, said the company hopes to break ground at Calvert Cliffs as early as 2008, putting the new reactor on pace for completion by 2015.
"However, if we encounter delays in Maryland, we are prepared to proceed with the first EPR [nuclear reactor] at our Nine Mile Point nuclear plant location in New York," he said.
