Constellation Energy Group's joint venture with a French company to build a nuclear reactor at Calvert Cliffs is now "first in line" for a federal loan guarantee, according to an influential lawmaker from Maryland.
Democratic Rep. Steny H. Hoyer, the House majority leader, said in an interview Thursday that he has been informed by senior administration officials that the Calvert Cliffs project is further along in the loan-guarantee process than competing projects in Texas and South Carolina.
That's potentially significant because, at the moment, the Department of Energy has only enough loan authority to offer one project a federal guarantee.
Hoyer, whose Southern Maryland district includes Calvert Cliffs, site of two existing reactors on the western shore of the Chesapeake Bay, said company officials were informed about two weeks ago that their application is nearly ready to be reviewed by the credit board that makes loan guarantee recommendations to the energy secretary.
He emphasized that the Maryland project still has not received final approval for a loan guarantee, expected to be in the $7 billion to $8 billion range. Hoyer said he had been in touch with top officials at the White House and the Department of Energy on the issue.
"I have been pushing very hard to get an approval of loan guarantees," he said. "And we're making progress."
Hoyer said timing was important because the project also has a commitment for financial support from COFACE, the French export credit agency, in the form of almost $2.9 billion in debt financing. Company officials have said that once they get a conditional U.S. loan guarantee, they would have about two years to work on completing the financing arrangements and gaining approval from the Nuclear Regulatory Commission, which is not expected before 2012.
A company spokeswoman said a U.S. loan guarantee would be an "essential milestone" for the proposed project. Kelly Biemer of UniStar Nuclear Energy, the joint venture between Constellation and Électricite de France, said the company hopes to receive a conditional loan guarantee commitment "very soon."
Comments by Constellation executives during a conference call with financial analysts in April led some investors to conclude that the company's loan guarantee application had already been approved. That apparent misinterpretation caused the price of the company's stock to drop, which analysts at the time attributed to a belief that the relatively low price of electric power does not justify the risk of building a new nuclear plant.
President Barack Obama has made increased nuclear power an important element of his energy strategy. Nuclear plants currently generate about one-fifth of the electricity used in the United States.
Earlier this year, during a visit to Maryland, Obama announced the first conditional loan guarantee for a new nuclear project. It went to a joint venture that plans to add two nuclear units to a plant in Georgia.
Under the federal program, the U.S. government agrees to repay the loans for nuclear plant construction if a company defaults on the debt.
The Department of Energy has already obligated more than $10 billion of the $18.5 billion in loan guarantee authority for 2010. Obama has requested an additional $35.5 billion in his 2011 budget and is asking Congress to advance $9 billion immediately, which would allow more than one new project to gain loan guarantee approval.
The House of Representatives was scheduled to vote on additional nuclear loan guarantee funding Thursday evening as part of a war supplemental measure. The Senate would need to act before the administration could use the expanded authority.
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