O'Malley meets with EDF officials to keep Calvert Cliffs project alive

Constellation pulled out of loan guarantee process

October 12, 2010|By Hanah Cho, The Baltimore Sun

Gov. Martin O'Malley met Tuesday with officials of Constellation Energy Group's French partner to discuss ways to revive the proposed third reactor at Calvert Cliffs, after the Baltimore company pulled out of federal financing negotiations this weekend, sharply setting back plans for the plant.

O'Malley is one of several state and local officials who hope to keep the project alive and save thousands of jobs to build and operate the $9.6 billion reactor in Southern Maryland.

Constellation and Electricite de France formed Unistar Nuclear Energy to develop nuclear power plants in the United States, including a third unit at Calvert Cliffs. But Baltimore-based Constellation said last weekend that the terms of a proposed federal loan guarantee were unreasonable and would add $880 million to the venture's cost, according to a letter sent Friday to the U.S. Department of Energy. The partners had already spent $600 million on the project.

"The discussion centered on the shared desire to keep at the table and ultimately come up with a way forward that revives the project and saves the jobs associated with it," O'Malley spokesman Shaun Adamec said, noting that the talks were continuing. O'Malley met with three EDF officials, including EDF North America President Jean-Pierre Benque, for an hour at the governor's residence in Annapolis.

Former Gov. Robert L. Ehrlich Jr., O'Malley's Republican opponent in the November election, said Tuesday that he would "work in bipartisan fashion with the Obama administration to ensure favorable terms for all parties in involved," said spokesman Andy Barth. "With Maryland's economic and energy security at risk, settling for 'no' is not an option."

House Majority Leader Steny H. Hoyer, whose district includes the Calvert Cliffs plant and who lobbied the Obama administration for the loan guarantee, said he would look for ways to revive the project.

"I can't say with certainty that we have a path forward at this time," the Maryland Democrat said in an interview. "Unistar still exists, and we still have very responsible parties involved and with capacity to get this project done. We'll continue to work on it until I'm convinced there is not a way forward under these circumstances."

EDF confirmed that its representatives met with O'Malley and said in a statement that the governor "offered to do whatever he could do to move the project forward to generate non-greenhouse gas-emitting electricity and create new jobs in Maryland."

However, EDF has said it is unsure how the project could move forward given Constellation's decision.

Even with a loan guarantee in place, Constellation and EDF would face a challenging environment for building nuclear projects. Natural gas prices have plunged, boosting the attractiveness of gas-fired generators as an electricity source. The failure of climate change legislation that would have penalized carbon emissions is also a setback for low-carbon nuclear energy. Constellation cited those factors, in addition to the $880 million it would have to pay to obtain the loan guarantee, in its decision to pull out of the federal loan process.

Constellation's decision has been a particular disappointment for local officials and business leaders in Calvert County, who hope the project can be saved.

The two nuclear units at Calvert Cliffs employ more than 900 workers, including contractors. The proposed third reactor was expected to create up to 4,000 construction jobs and 400 permanent positions. Constellation contributes about $23 million in tax revenue to the county annually, said Wilson Parran, president of the Calvert County Board of Commissioners.

"We were looking forward to having those jobs in the county," Parran said. "I'm hoping it's not dead."

Gerald W. "Jerry" Clark, vice president of the Calvert County Board of Commissioners, blamed the federal government for the project's unraveling. But he said he hopes the state's congressional delegation, including Hoyer and Sens. Barbara A. Mikulski and Benjamin L. Cardin, could help revive Calvert Cliffs 3.

"It's a shame that this project doesn't look like it's going to go forward because of requirements from the federal government," said Clark, a Republican. "With the economy in the shape it is, the construction period for that plant and the amount of employees would have had a really big financial impact on the entire economy of Calvert County."

But the consumer advocacy group Maryland Public Interest Research Group was delighted by Constellation's decision to abandon negotiations over the loan guarantees, saying that the project had "crumbled under its own weight."

"They wanted taxpayers to assume more risk, and the Department of Energy said, 'No, we're not going to saddle taxpayers with unnecessary financial risks,'" said Johanna E. Neumann, PIRG's state director. "Constellation balked."

hanah.cho@baltsun.com

Baltimore Sun reporter Nicole Fuller contributed to this article.

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