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Constellation partner EDF wants to go forward with third Calvert Cliffs reactor

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By Steven Mufson
Wednesday, October 13, 2010; 11:55 PM

Constellation Energy's French partner in a nuclear power initiative says it wants to push ahead with a proposal to build a third reactor at the Calvert Cliffs nuclear plant and offered to buy out Constellation's half of their joint venture.

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The proposal was set back Friday when Constellation told the U.S. Energy Department that it was withdrawing its application for a $7.5 billion federal loan guarantee, which the Obama administration had just decided to approve. Constellation said the administration's terms were "unworkable."

In a letter Wednesday, its partner, EDF, the world's largest nuclear plant operator, said it was "ready to commit further resources" to the Calvert Cliffs project and to "shoulder 100 percent of the risk and burden until construction begins."

But EDF said Constellation would first have to settle a separate dispute.

Constellation says a clause of a 2008 agreement entitles it to force EDF to pay $2 billion for a handful of Constellation's older fossil fuel power plants. The agreement was signed at the depth of the financial crisis, when EDF came to Constellation's aid.

EDF said the clause was meant to be used if Constellation were still in financial duress, which it is not. EDF said it would fight in court any effort to force it to buy the plants if Constellation were "so imprudent and destructive as to attempt to exercise" the option.

Constellation replied Wednesday that it "looks forward to discussing the details" of EDF's proposal but that "with respect to the separate matter of the put option, we will hold EDF to its stated commitment to stand fully behind its contractual obligations."

As a foreign company, EDF cannot operate a U.S. nuclear plant under U.S. law. But it can move ahead with development and construction on its own. EDF said that if it bought Constellation's 51 percent interest in their Unistar joint venture, it would seek a different U.S. partner.

"We feel an obligation to explore every reasonable avenue to keep the prospects of this project alive," EDF said in its letter.

The fate of the new Calvert Cliffs reactor has drawn a lot of attention from Maryland lawmakers, who are eager to bring the estimated 4,000 jobs that would be needed to add on to the existing nuclear site. Gov. Martin O'Malley (D) and House Majority Leader Steny Hoyer (D-Md.) have been particularly active in lobbying for a federal loan guarantee to help cut the cost of the project and make it a reality.

"After discussions with both Constellation and EDF over the weekend, and an in-person meeting with senior EDF executives on Monday, I am pleased that the companies are expressing a willingness to resume discussion to try to move the project forward," Hoyer said in a statement.

Sources close to EDF, however, were pessimistic after Constellation's response Wednesday and were braced for possible litigation.


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