Constellation Drops Maryland Nuclear Plant Loan, Denting EDF's U.S. Plans

[IDemo]

By Jim Polson and Alan Katz - Oct 9, 2010 11:07 AM MT
Bloomberg

Constellation Energy Group Inc. pulled out of a loan guarantee process to build a nuclear reactor with Electricite de France SA, potentially damaging the French utility’s U.S. expansion plans and the companies’ partnership.

The cost of a $7.5 billion U.S. government loan guarantee that the companies’ joint venture, UniStar Nuclear Energy, would need to build the Calvert Cliffs 3 reactor in Maryland is too high and creates too much risk for Constellation, the utility said in a statement today. It added that it was up to EDF to decide the next step in the loan guarantee process.

Constellation’s decision deals a blow to relations with EDF, which is waiting to learn whether the U.S. utility will exercise an option that could force EDF to buy as much as $2 billion of Constellation’s non-nuclear power plants. That may be more likely after the withdrawal, said Ingo Becker, head of utilities sector research at Kepler Capital Markets.

“EDF very clearly said if they exercise the put, this thing is over,” Becker said. “Constellation may have just turned around the calendar and pulled out of the new build before exercising the put, anticipating EDF’s reaction.”

http://www.bloomberg.com/news/2010-10-09/constellation-drops-maryland-nuclear-plant-loan-denting-edf-s-u-s-plans.html

[kristopher]

1. The loan fee is too high, eh?

"...Constellation said it received a government estimate that the venture would have to pay about $880 million to the U.S. Treasury for the loan guarantee, “dramatically out of line with both our own independent assessments and of what the figure should reasonably be.”

...

Constellation’s pullout may be an effort to win more favorable loan guarantee terms, said Daniele Seitz, a New York- based utility analyst for Dudack Research Group.

“Building a nuclear plant for Constellation would be an investment of $5 billion or more with no return for 10 years, so it needs help,” Seitz said. “Constellation may feel that the government is not willing to bear enough share of the cost.”


The CBO puts the odds of default at above 50% and these greedy bastards think this fee is too high? Do you think they ever even consider that the fee is supposed to cover ALL of the losses the people will be exposed to? They've been screwing the system for so long they think they are entitled to all the profits for no risk whatsoever.

Freaking amazing.

[bananas]

3. kristopher, you've been proven right again

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=115x231521

[Dead_Parrot]

2. That can't be right.

I keep hearing that the loan guarantee system is a huge hand-out to nuclear energy.

[bananas]

4. It is a huge hand-out

but nuclear energy sucks so bad, nobody wants it even with the huge hand-out.

[poopfuel]

5. and in more tee hee hee news on nuclear power

http://www.nytimes.com/2010/10/11/business/energy-environment/11power.html

[kristopher]

6. Greedy sods, eh?

They think it is fair to pay only 1-2% for a guarantee on loans that because of have an above 50% chance of going into default, according to the CBO.

The fee requested by the govt represents 11% of the total guarantee but they wanted 1-2%.

It should have been 50%+.

[TheWraith]

7. Look at those goalposts move!

Gotta be doing at least 40 miles an hour.