September 15, 2007

Global Monitor (September 2007)

Constellation files partial COL

Baltimore-based Constellation Energy Group has dipped its big toe into the nuclear regulatory licensing waters, testing the temperature for a third unit at its 1,165-MW Calvert Cliffs plant in southern Maryland, 50 miles south of Washington, D.C.

 

Constellation has filed the first part of a request for a combined construction and operating license (COL) for a new, 1,600-MW unit with the U.S. Nuclear Regulatory Commission (NRC). As part of a consortium with France's Areva and Électricité de France, the utility anticipates licensing an Areva "evolutionary" power reactor (EPR) similar to one Areva is building in Finland.

Areva's EPR has not yet been blessed by the NRC for use in the U.S. The Finnish project is over budget and behind schedule. Then again, the most advanced American next-generation designs also lack final NRC approval, and none is accumulating the construction experience that Areva's is.

Constellation's NRC filing was low-key, coming in mid-July without a formal announcement by either the company or the NRC. The Washington Post headline hyped the submission of initial documents as the "first application to build a new U.S. nuclear power plant in three decades." Not exactly. The Baltimore Sun had a better grip on the story, describing it as a "partial application" for a new nuke.

To his credit, the Post's reporter, Steven Mufson, described the Constellation filing as "another small step toward a resurgence of the nuclear power industry." Constellation said it expects the new unit to cost $4 billion.

The utility filed a 5,900-page environmental report for the new reactor, but nothing more. An NRC spokesman told the Sun, "They're the first in the door with some part of a request to actually build a new reactor."

Constellation VP and Calvert Cliffs head honcho George Vanderheyden told the Sun that the company may or may not submit the rest of a COL application by the end of the year, He told the Post, "No entity, including Constellation, has yet made a decision to build a nuclear power plant, but we're moving as aggressively as we can [through] the first phase, which is the licensing phase."

Constellation CEO Mayo Shattuck III is bullish about new nukes and has long made his fondness for fission known. But Shattuck, formerly of Wall Street, also recognizes that financing a new nuke is a critical-path issue, and one that the industry is far from having in hand.

Many veteran analysts of the nuclear business also find financing a new reactor a core issue. Ed Lyman, who follows nuclear policy issues for the Union of Concerned Scientists, told the Post, "Until we see investors put money down toward the multi-billion-dollar cost of building new plants, we should remain skeptical that there's any major shift under way."

The two existing units at Calvert Cliffs (Figure 1) are powered by pressurized water reactors from Combustion Engineering that entered service in 1975 and 1977. In 2000 the plant became the first nuclear station to have its license extended for 20 years by the NRC. Since then, more relicensings have become routine.

 

 

Elsewhere in Maryland, the state's Public Service Commission (PSC) held a two-day powwow in July to figure out what to do about high electricity prices. The meeting, called by Governor Martin O'Malley, was triggered by last summer's 72% retail price hikes by Constellation subsidiary Baltimore Gas & Electric Co (BG&E). One observer described the session as "providing a lot of hot air, but not much in the way of new ideas."

O'Malley has asked the Maryland PSC to examine the implications of a formal divestiture of Constellation and BG&E. Several analysts, however, say that such a move would benefit Constellation and have zero impact on retail rates. Why? BG&E will still have to procure its supplies in a market dominated by Constellation, which isn't likely to give the utility a break once it's no longer a subsidiary.

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